Effective Signal Jamming

Résumé

Signal-jamming models are often used to explain certain features in the behaviour of firms, politicians and employees as attempts to influence an observer. However it is not clear whether such signal-jamming is effective because in equilibrium the observer rationally adjust for them. We analyse a situation in which a privately informed agent can, with some cost, distort a noisy signal about his information that a receiver gets before making a binary decision. We show that in such case signal-jamming will cause a systematic change in the receiver’s choice, and that the change is in favour of the agent’s preferred decision, i.e. signal-jamming is effective. We also find that the benefits of signal-jamming compensate for the effort exerted by the agent. The receiver, however, is always hurt by signal-jamming, even if she could commit to an ex-ante optimal threshold. We finally discuss the applications of the model to university admissions, re-elections and limit pricing.