This paper studies the role of consistency as a signaling device. We propose a two-period model that highlights the informativeness of consistency as a signal of skills and allows for the analysis of consequences for behavior. In a simple principal–agent experiment, we test the basic intuition of the model. We show that consistency is indeed associated with skills. Consequently, consistency is valued by others, inducing people to act consistently.
Data, as supplemental material, are available at http://dx.doi.org/10.1287/mnsc.2016.2459.
This paper was accepted by Uri Gneezy, behavioral economics.