Signaling with burned money and transparent motives

摘要

This paper studies how an informed Sender communicates with an uninformed Receiver by visibly burning money. The Sender prefers higher Receiver actions, while the Receiver wants to match the true state. I characterize the full set of equilibrium payoff pairs and show that its Pareto frontier is generated by lower-censorship equilibria. In these equilibria, the Sender burns no money when the state is low and uses costly signals to disclose higher states.