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A system in which costly signaling is better for signaler and donor than is cost-free signaling. Axes are as in Fig. 1. Signalers have fitnesses on [0, 1] with probability density function p(x), and all donors have fitness D. There can be no cost-free signaling equilibrium other than the no-signaling equilibrium; the costly signaling equilibrium with two pools, divided at B, is better for both players.
