{"paper":{"title":"Pitfall of Precision in Noisy Signaling","license":"http://arxiv.org/licenses/nonexclusive-distrib/1.0/","headline":"When signal precision is already high, further improvements reduce screening accuracy and lower the principal's welfare.","cross_cats":[],"primary_cat":"econ.TH","authors_text":"Shuhua Si, Yangfan Zhou","submitted_at":"2026-05-13T05:50:02Z","abstract_excerpt":"A principal decides whether to approve an agent based on a noisy signal (e.g., test scores) generated by the agent. High-quality agents can produce high signals on average at lower cost, but the realizations are subject to noise that depends on the screening technology's precision. We uncover a paradoxical \"pitfall of precision\": when precision is already high, further improvements reduce screening accuracy and lower the principal's welfare. This occurs because greater precision incentivizes strategic signaling from more low-quality agents, outweighing the direct benefit from improved precisio"},"claims":{"count":4,"items":[{"kind":"strongest_claim","text":"We uncover a paradoxical 'pitfall of precision': when precision is already high, further improvements reduce screening accuracy and lower the principal's welfare. This occurs because greater precision incentivizes strategic signaling from more low-quality agents, outweighing the direct benefit from improved precision.","source":"verdict.strongest_claim","status":"machine_extracted","claim_id":"C1","attestation":"unclaimed"},{"kind":"weakest_assumption","text":"Low-quality agents can costlessly or cheaply increase their signaling effort in response to higher precision, and the resulting increase in mimicry outweighs the direct informational gain from reduced noise.","source":"verdict.weakest_assumption","status":"machine_extracted","claim_id":"C2","attestation":"unclaimed"},{"kind":"one_line_summary","text":"Higher precision in noisy screening signals can reduce decision accuracy by prompting increased strategic mimicry from low-quality agents.","source":"verdict.one_line_summary","status":"machine_extracted","claim_id":"C3","attestation":"unclaimed"},{"kind":"headline","text":"When signal precision is already high, further improvements reduce screening accuracy and lower the principal's welfare.","source":"verdict.pith_extraction.headline","status":"machine_extracted","claim_id":"C4","attestation":"unclaimed"}],"snapshot_sha256":"7dbe63c0f38fc7985978d5ccaa188d640fa9df79e6d7e844b2e0aa15275a68d4"},"source":{"id":"2605.13039","kind":"arxiv","version":1},"verdict":{"id":"272c547e-0802-4b1e-8f7d-d15c72705f65","model_set":{"reader":"grok-4.3"},"created_at":"2026-05-14T01:57:42.320020Z","strongest_claim":"We uncover a paradoxical 'pitfall of precision': when precision is already high, further improvements reduce screening accuracy and lower the principal's welfare. This occurs because greater precision incentivizes strategic signaling from more low-quality agents, outweighing the direct benefit from improved precision.","one_line_summary":"Higher precision in noisy screening signals can reduce decision accuracy by prompting increased strategic mimicry from low-quality agents.","pipeline_version":"pith-pipeline@v0.9.0","weakest_assumption":"Low-quality agents can costlessly or cheaply increase their signaling effort in response to higher precision, and the resulting increase in mimicry outweighs the direct informational gain from reduced noise.","pith_extraction_headline":"When signal precision is already high, further improvements reduce screening accuracy and lower the principal's welfare."},"references":{"count":57,"sample":[{"doi":"","year":null,"title":"The Quarterly Journal of Economics , volume=","work_id":"64a90b72-f929-401d-9993-2c3a73660393","ref_index":1,"cited_arxiv_id":"","is_internal_anchor":false},{"doi":"","year":null,"title":"Monetary Economics , volume=","work_id":"35d84df8-0ab4-4169-925b-befcecf0f61b","ref_index":2,"cited_arxiv_id":"","is_internal_anchor":false},{"doi":"","year":2009,"title":"Journal of Public Economics , volume=","work_id":"44cd4486-80bb-41a1-b153-a2e3ea377f60","ref_index":3,"cited_arxiv_id":"","is_internal_anchor":false},{"doi":"","year":2018,"title":"American Economic Journal: Economic Policy , volume=","work_id":"b0802137-109a-48c8-aaed-5ad9581476e3","ref_index":4,"cited_arxiv_id":"","is_internal_anchor":false},{"doi":"","year":2007,"title":"Public Finance Review , volume=","work_id":"9780ffd0-bcec-4974-a30d-5bcf06aa1196","ref_index":5,"cited_arxiv_id":"","is_internal_anchor":false}],"resolved_work":57,"snapshot_sha256":"e5cb4e6c3413e0d62e9318a2b8dcec9a4d4deb74572a26c801ae2bda37892d6d","internal_anchors":0},"formal_canon":{"evidence_count":2,"snapshot_sha256":"28a8366619b6627033840d89c0a53dd16748b46f7a343e3bc3d8c410ec058c20"},"author_claims":{"count":0,"strong_count":0,"snapshot_sha256":"258153158e38e3291e3d48162225fcdb2d5a3ed65a07baac614ab91432fd4f57"},"builder_version":"pith-number-builder-2026-05-17-v1"}