Chess pieces disappearing in a game, representing attrition.

Dynamic Signaling: Decoding Credibility in a World of Vanishing Commitments

Rhea Morgan in Business & Economy December 2025 • 4 min read.

"Can firms signal true intentions without long-term promises? New economic models reveal the power of 'attrition' and strategic patience."

In today's fast-paced economy, building trust is more critical than ever. Whether it's a company trying to convince regulators they're not a monopoly, a seller assuring a buyer of product quality, or a job seeker signaling their true abilities to potential employers, the need to convey credible information is constant. But what happens when those signals can't be backed up by ironclad, long-term commitments? How can anyone truly believe what they're being told?

A recent antitrust case involving Apple and Epic Games perfectly highlights this challenge. Epic Games argued that Apple's control over the App Store was unfairly monopolistic. One key point was whether Apple's commission rates reflected true competition or were simply a way to exploit market dominance. Apple countered that it hadn't raised commission rates in over a decade, even lowering them for some developers. The judge, however, wasn't entirely convinced, suggesting the changes might have resulted from regulatory pressure rather than genuine competition.

This raises a fundamental question: can a firm's actions, like pricing decisions, really serve as credible signals of its competitive environment, especially when facing scrutiny? Traditional economic theory suggests that without a firm commitment to maintain those actions, any signal could be temporary and ultimately misleading. But new research is challenging that view, revealing how meaningful signals can emerge even in dynamic settings where long-term promises are hard to keep.

The Power of Attrition: Signaling Through Strategic Patience

Chess pieces disappearing in a game, representing attrition.

Egor Starkov's research introduces a dynamic signaling model that challenges the conventional wisdom. The model explores scenarios where a long-lived 'sender' (like a company) has private information ('type') and interacts repeatedly with a 'receiver' (like a regulator or consumer). Unlike traditional models, this one assumes the sender has limited power to commit to future actions. The surprising result? Meaningful signaling is still possible, even without those commitments.

The key to this dynamic signaling lies in a concept called 'attrition.' In this context, attrition refers to a situation where the weakest type of sender mixes between revealing their true type and trying to blend in with stronger types. This creates a 'war of attrition,' where strategic patience and the willingness to reveal information over time become the credible signal.

Here's what this means:

Contrary to popular belief: Informative outcomes do not always need unreasonable off-path beliefs.
All signaling takes place through attrition: The weakest type mixes between revealing own type and pooling with the stronger types.

Imagine a company under regulatory pressure. It could maintain artificially low prices to appear competitive. But a true monopolist might occasionally raise prices to test the waters, revealing its true nature. It's this delicate dance between seeming cooperative and showing true strength that creates a credible signal, as the weakest players are weeded out over time.

Implications for Trust and Transparency

Starkov's model offers valuable insights for anyone seeking to build or assess credibility in dynamic situations. It suggests that true intentions are revealed not through grand promises, but through consistent actions and a willingness to endure the costs of signaling over time. It's a reminder that in a world of fleeting commitments, strategic patience and transparency are the keys to building lasting trust.

About this Article -

This article was crafted using a human-AI hybrid and collaborative approach. AI assisted our team with initial drafting, research insights, identifying key questions, and image generation. Our human editors guided topic selection, defined the angle, structured the content, ensured factual accuracy and relevance, refined the tone, and conducted thorough editing to deliver helpful, high-quality information.See our About page for more information.

This article is based on research published under:

DOI-LINK: 10.1016/j.jmateco.2023.102894,

Title: Only Time Will Tell: Credible Dynamic Signaling

Subject: econ.th

Authors: Egor Starkov

Published: 18-07-2020

Everything You Need To Know

In dynamic signaling, how can a company demonstrate its true competitive nature to regulators or consumers without making long-term commitments?

A company can signal its true competitive nature through consistent actions and strategic patience. This involves a concept called 'attrition,' where the weaker types of senders mix between revealing their true nature and trying to appear like stronger types. Over time, this 'war of attrition' allows the true nature of the company to become clear as the weaker players are weeded out, signaling credibility without the need for binding long-term promises. The Apple and Epic Games case illustrates this challenge, where Apple's pricing decisions were scrutinized to determine if they reflected true competition or market exploitation.

What is 'attrition' in the context of dynamic signaling models, and how does it contribute to conveying trustworthiness?

In dynamic signaling models, 'attrition' refers to the process where the weakest type of sender mixes between revealing their true type and trying to blend in with stronger types. This creates a 'war of attrition,' where strategic patience and the willingness to reveal information over time become credible signals. The willingness to endure the costs of signaling over time helps to weed out those who are not genuine, thus conveying trustworthiness through demonstrated resilience and transparency. Without attrition, it would be harder for receivers to differentiate between genuine signals and misleading ones, especially when long-term commitments are unreliable.

How does the dynamic signaling model, particularly the concept of 'attrition,' challenge traditional economic theories regarding credible signaling?

Traditional economic theory often emphasizes the need for firm commitments to ensure credible signaling. However, the dynamic signaling model, incorporating 'attrition,' demonstrates that meaningful signaling is possible even without the ability to make long-term promises. By focusing on consistent actions and the costs associated with maintaining a signal over time, the model shows that true intentions can be revealed through strategic patience and transparency. This challenges the conventional wisdom that informative outcomes require unreasonable off-path beliefs or ironclad commitments.

Can pricing decisions really serve as credible signals of a firm's competitive environment, and what does the research by Egor Starkov suggest about this?

Egor Starkov's research suggests that pricing decisions can indeed serve as credible signals, even without long-term commitments. His dynamic signaling model introduces the concept of 'attrition,' where a firm's willingness to maintain certain pricing strategies over time, despite potential costs or regulatory pressure, can reveal its true competitive nature. The model demonstrates that a 'war of attrition' emerges, with weaker firms eventually revealing their true type, while stronger firms demonstrate their resilience. This implies that consistent actions, rather than promises, are key to building trust and conveying genuine intentions.

What are the implications of the 'dynamic signaling model' and 'attrition' for building trust and transparency in environments where long-term commitments are unreliable?

The 'dynamic signaling model' and the concept of 'attrition' suggest that trust and transparency can be built through consistent actions and strategic patience, rather than relying on long-term commitments. In environments where promises are unreliable, firms can signal their true intentions by enduring the costs of signaling over time, demonstrating a willingness to be transparent, and allowing weaker actors to be weeded out through the 'war of attrition'. This approach emphasizes the importance of continuous behavior and the resilience to maintain credible signals, fostering trust even in volatile and uncertain environments. It suggests that regulatory bodies and consumers should focus on observing consistent patterns of behavior rather than relying solely on stated commitments.