selfsignaling

Self-signaling is a concept in behavioral economics and psychology that describes how individuals infer their own beliefs, preferences, or identities from their actions. Unlike traditional signaling, which conveys information to others, self-signaling focuses on how choices provide evidence to the actor about what they value or who they are. A decision-maker may derive utility not only from external outcomes but also from the alignment between choices and internal self-image. As a result, people may incur costs or sacrifice immediate welfare if that helps sustain a preferred self-view.

Mechanisms of self-signaling involve a utility component tied to self-consistency. When a choice is made, it updates beliefs about one’s traits—such as being generous, rational, or courageous. This can lead to decisions that are not the most profitable from an outside perspective but reinforce how the person wants to see themselves.

Examples include charitable giving to feel generous even if the donation isn’t the most efficient use of resources, or working long hours to uphold an identity as diligent. In consumer or ethical behavior, people may buy costly, virtuous-sounding products to reinforce a self-image as responsible or ethical. In finance, an investor might hold an underperforming asset to avoid signaling a lapse in prudence.

Implications of self-signaling include explaining persistence of seemingly irrational behaviors and informing experimental design and policy by accounting for how actions shape self-perception. Critics note challenges in distinguishing self-signaling from intrinsic motivation and identity effects.