Justified Communication Equilibrium

Justified communication equilibrium (JCE) is an refinement for signaling games with cheap-talk communication. A strategy profile must be a JCE to stable outcome of nonequilibrium learning when receivers are initially trusting and senders play many more times than receivers. In the model, counterfactual “speeches” that have been informally used motivate past refinements messages actually sent. Stable profiles need not perfect Bayesian equilibria, so sometimes preserves equilibria existing eliminate. Despite this, it resembles earlier D1 NWBR, coincides them in co-monotonic games. (JEL C70, D82, D83, J23, M51)