The Market for AI-Assisted Signaling

This paper studies a market in which AI providers choose technologies and prices for assistance used to signal ability. Individual adoption is unobserved. Profitable assistance can lower welfare relative to signaling without AI, even when ability remains fully revealed. Easier imitation increases the output required to demonstrate ability, and the extra signaling can outweigh production savings. Providers can profit from improving assistance for lower-ability senders because this increases higher-ability senders' purchases. Such improvements can lower welfare relative to retaining existing tools. Competition among providers offering the same technology supports full information, but development costs can sustain monopoly provision that conceals ability. Greater verification capacity can also reduce information by changing which customers providers serve.

Authors

Publication Details

Journal
arXiv (Cornell University)
Published
2026-11-02
DOI
https://doi.org/10.48550/arxiv.2611.02910
Primary Topic
Game Theory and Applications
Type
preprint
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preprint

The Market for AI-Assisted Signaling

Federico Vaccari
arXiv (Cornell University)
Game Theory and Applications
preprint

The Market for AI-Assisted Signaling

Federico Vaccari
preprint en

Abstract

This paper studies a market in which AI providers choose technologies and prices for assistance used to signal ability. Individual adoption is unobserved. Profitable assistance can lower welfare relative to signaling without AI, even when ability remains fully revealed. Easier imitation increases the output required to demonstrate ability, and the extra signaling can outweigh production savings. Providers can profit from improving assistance for lower-ability senders because this increases higher-ability senders' purchases. Such improvements can lower welfare relative to retaining existing tools. Competition among providers offering the same technology supports full information, but development costs can sustain monopoly provision that conceals ability. Greater verification capacity can also reduce information by changing which customers providers serve.

arXiv (Cornell University)
Game Theory and Applications
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