Nash Codes for Noisy Channels

Penelope Hernandez () and Bernhard von Stengel

No 912, Discussion Papers in Economic Behaviour from University of Valencia, ERI-CES

Abstract: This paper studies the stability of communication protocols that deal with transmission errors. We consider a coordination game between an informed sender and an uninformed decision maker, the receiver, who communicate over a noisy channel. The sender's strategy, called a code, maps states of nature to signals. The receiver's best response is to decode the received channel output as the state with highest expected receiver payoff. Given this decoding, an equilibrium or ``Nash code'' results if the sender encodes every state as prescribed. We show two theorems that give sufficient conditions for Nash codes. First, a receiver-optimal code defines a Nash code. A second, more surprising observation holds for communication over a binary channel which is used independently a number of times, a basic model of information transmission: Under a minimal ``monotonicity'' requirement for breaking ties when decoding, which holds generically, any code is a Nash code.

Keywords: sender-receiver game; communication; noisy channel (search for similar items in EconPapers)
JEL-codes: C72 D82 (search for similar items in EconPapers)
Date: 2012-05
New Economics Papers: this item is included in nep-cta, nep-gth and nep-mic
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https://www.uv.es/erices/RePEc/WP/2012/0912.pdf (application/pdf)

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Journal Article: Nash Codes for Noisy Channels (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:dbe:wpaper:0912

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