We find that allowing for additional, noisy information on sender type can radically alter the predictions of standard signaling models, potentially explaining why those with the greatest ability to signal might choose not to. We examine equilibria where medium types separate themselves from low types by signaling, but high types then differentiate themselves from medium types by not signaling, or countersignaling . High types not only save the cost of signaling by relying on the additional information to stochastically separate them from low types, but in doing so they separate themselves from the signaling medium types. Hence they may countersignal even when signaling is a productive activity. To evaluate this theory we report on a two-cell experiment in which the unique Nash equilibrium of one cell involves countersignaling by high types.
Experimental results confirm that subjects can learn to countersignal.