Apply signaling theory (Spence, 1973) to analyze how agents communicate private information through costly, credible signals under information asymmetry.
SkillScore82Maintained
Automatic
◆Finance & Accounting pack
Last verified 8/28/2026
What it changes
Passed 18 of 22 test cases with the skill, and 10 of 22 without it.
Without skill45%
With skill82%
Checks it passed that the model alone missed
The main header uses the format ## Signaling Analysis:
The response includes the section header ### Equilibrium
The main title header uses the format ## Signaling Analysis:
and 9 more in the full report
8 fixed10 passed either way4 still failing0 broke
Pass-rate lift
+36 pp
Tokens
-1%
Agent turns
0%
Response time
-30%
Model gemini-3.6-flashMeasured 8/28/2026v118 of 22 cases passed with skill
Tokens, turns and time describe resource use, not a dollar price.
See it in action
One of 8 test cases the skill fixed. Same model, same prompt, with and without the skill.
1 of 8
Prompt
We are evaluating a public debt issuance to signal confidence in our upcoming product pipeline to credit rating agencies and equity markets. Provide a formal signaling theory evaluation of this move. Make sure to structure the output with: 1) Information Structure describing who holds private knowledge and who makes decisions, 2) Signal Assessment table analyzing observability, costs, differential cost, and credibility, 3) Equilibrium analysis specifying the regime type and stability, and 4) Strategic implications containing rational receiver inferences and recommendations.
What was checked, without and with the skill
Checked
Without skill
With skill
The Signal Assessment section contains a two-column table with headers Criterion and Assessment
Missed
Passed
The response includes the section header ### Equilibrium
Missed
Passed
The response identifies fixed debt service obligations as the signal cost mechanism
Passed
Passed
case-03 · gemini-3.6-flash · 8/28/2026 · answers are capped and redacted
What's inside
The instructions your model reads when the skill loads.
SKILL.md105 linessingle file
Signaling Theory
Overview
Signaling theory (Spence, 1973) explains how informed parties credibly communicate private information to uninformed parties through costly actions. In finance, firms signal quality through dividends, capital structure, underpricing, and other mechanisms that are too costly for low-quality firms to mimic.
Assessing whether a corporate action conveys credible private information
Designing mechanisms to separate high-quality from low-quality issuers
When NOT to Use
When information asymmetry is minimal (both sides have equal information)
For cheap-talk communication (costless signals are not credible)
When the signaling cost exceeds the benefit to the signaler
Assumptions
IRON LAW: A signal is credible ONLY if it is costly to fake — cheap
talk is not a signal. For a separating equilibrium, the signal must
be differentially costly: affordable for high-quality types but
prohibitively expensive for low-quality types.
Key assumptions:
Information asymmetry exists between sender and receiver
Signal cost is negatively correlated with quality (single-crossing property)
Receivers rationally update beliefs based on observed signals
Equilibrium can be separating (types distinguished) or pooling (types indistinguishable)
Methodology
Step 1 — Identify Asymmetry and Parties
Who is the informed party (sender)? What private information do they hold?
Who is the uninformed party (receiver)? What decision do they make?
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