Strategic stability in repeated signaling games

This paper extends selection rules now used in the signaling literature (such as the Intuitive Criterion of Cho and Kreps (1987)) to a class of repeated signaling games, where each player can exchange the messages conditioned on his private information. STABAC (STAbility and BACkward induction) is defined as a procedure whereby forward induction arguments (Kohlberg and Mertens (1986)) are applied in combination with the backward induction process. We specify the conditions under which any strategically stable outcome of a repeated signaling game includes an equilibrium that induces a stable equilibrium outcome in every subform, whence STABAC does not eliminate any stable outcome of the repeated signaling game.