Goodwill in communication

Aditya Kuvalekar, Elliot Lipnowski and João Ramos

Journal of Economic Theory, 2022, vol. 203, issue C

Abstract: An expert advises a decision maker over time. With both the quality of advice and the extent to which it is followed remaining private, the players have limited information with which to discipline each other. Even so, communication in and of itself facilitates cooperation, the relationship evolving based on the expert's advice. We show a formal equivalence between our setting and one of cheap talk with capped money burning, enabling an exact characterization (at fixed discounting) of the expert's attainable payoffs. While an ongoing relationship often helps, our characterization implies that, absent feedback, relational incentives can never restore commitment.

Keywords: Cheap talk; Communication; Persuasion; Repeated game (search for similar items in EconPapers)
JEL-codes: C73 D82 D83 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:203:y:2022:i:c:s0022053122000576

DOI: 10.1016/j.jet.2022.105467

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