Hypocrites, Devil's Advocates, and Bandwagoneers : Essays on Costly Signaling

Abstract: This doctoral thesis contains three essays, all studying different aspects of costly signaling in social interactions. The first chapter explains Hypocrisy as an equilibrium outcome of strategic interactions where society cares about a person's private identity but only observes public actions. When people care about social esteem and the cost of misrepresenting themselves, those with the lowest social standing masquerade as highly respected members of society. Real-world phenomena include pedophile priests, sex-offender feminists, and seemingly busy dispensable office workers. The second chapter studies the acquisition of costly information in sequential voting. Examples include jurors paying attention during trial and board members evaluating the benefits of some technological investment. This paper is the first to explain why late voters sometimes follow the first voter, commonly known as bandwagoneering, and why they sometimes get to cast the deciding vote. When they do not herd, the second voter acts as a Devil's advocate and purposely vote against the first voter without acquiring information. In a lab experiment, more participants act as Devil's advocates when the cost of information is high, as predicted by the theory. The third chapter theoretically and empirically shows that a sequential mechanism of information acquisition and voting is better than a simultaneous mechanism for strategic and myopic voters. When voters are strategic, the sequential mechanism acts as a coordination device, maximizing information aggregation while minimizing the total cost of information acquisition. The one exception is when voters are myopic and information is of low cost and low quality, then total welfare is higher under a simultaneous mechanism. A lab experiment confirms the main result: The round payoff is 22 percent higher in the sequential voting treatment than in the simultaneous treatment.