Deceptive signalling: Causes, consequences and remedies

Abstract

Deceptive signalling occurs when resource seekers provide communication or observable behaviour that seems to indicate high‐quality attributes yet actually misleads about the resource seekers’ attributes. Deceptive signalling is an everyday phenomenon that hurts investors, consumers and high‐quality ventures alike, leading to resource misallocation and market inefficiencies. It is also a challenge for researchers interested in signalling theory, as deceptive signalling defies signalling theory's predictions, leading to ambiguity regarding if and how deceptive signals should be analysed from a signalling theory perspective. Research on deceptive signalling has accumulated, yet it is scattered across disciplines and discourses, which hampers our ability to understand the phenomenon and obstructs progress in signalling theory. To mitigate this state of affairs, this paper provides a cross‐disciplinary integrative review, systematizing extant research on deceptive signalling, developing suggestions for the integration of deceptive signalling into signalling theory and outlining a research agenda on currently unresolved questions in signalling research pertaining to deceptive signalling. Developing a better understanding of deceptive signalling seems particularly pressing as recent advances in AI technologies, which reduce the detectability of deceptive signals as well as the costs for producing such signals, will presumably lead to an exacerbation of deceptive signalling problems.