Multistage Information Transmission with Voluntary Monetary Transfer

Hitoshi Sadakane

ISER Discussion Paper from Institute of Social and Economic Research, The University of Osaka

Abstract: We analyze a cheap talk model in which an informed sender and an uninformed receiver engage in finite-period communication before the receiver chooses a project. During the communication phase, in each period, the sender sends a cheap talk message and the receiver voluntarily pays money for the message she receives. Our results show that combining multistage information transmission with the receiver's voluntary payments can improve welfare. Moreover, we find an upper bound of the receiver's equilibrium payoff and provide a sufficient condition for it to be approximated by the receiver's equilibrium payoff. This result shows that multistage information transmission with voluntary monetary transfer can be more beneficial for the receiver than a wide class of other communication protocols (e.g., mediation and arbitration).

Date: 2017-06, Revised 2019-01
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Persistent link: https://EconPapers.repec.org/RePEc:dpr:wpaper:1006rr

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