Signal and Competition for Licenses of Occupational Pension Fund Management Institutions

Abstract:

A signaling game, where the occupational pension fund management institutions are senders and compete for licenses while the regulation authority is receiver, is set up. Normative analysis shows that the separating equilibrium of market success, where high-ability institutions signal the competence with a cost higher than that low-ability institutions can support in order to prevent them from strategic signal inference of low-ability institutions, exists. And the more the high-ability institutions are, the lower the signaling cost is. With signaling cost data from content analysis empirical study shows the higher probability of winning the licenses is accompanied by higher signaling cost