Communication Games with Optional Verification

Simon Schopohl ()
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Simon Schopohl: EDEEM - Université Paris 1, Universität Bielefeld and Université Catholique de Louvain

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

Abstract: We consider a Sender-Receiver game in which the Sender can choose between sending a cheap-talk message, which is costless, but also not verified and a costly verified message. While the Sender knows the true state of the world, the Receiver does not have this information, but has to choose an action depending on the message he receives. The action then yields to some utility for Sender and Receiver. We only make a few assumptions about the utility functions of both players, so situations may arise where the Sender's preferences are such that she sends a message trying to convince the Receiver about a certain state of the world, which is not the true one. In a finite setting we state conditons for full revelation, i.e. when the Receiver always learns the truth. Furthermore we describe the player's behavior if only partial revelation is possible. For a continuous setting we show that additional conditions have to hold and that these do not hold for “smooth” preferences and utility, e.g. in the classic example of quadratic loss utilities

Keywords: cheap-talk; communication; costly disclosure; full revelation; increasing differences; Sender-Receiver game; verifiable information (search for similar items in EconPapers)
JEL-codes: C72 D82 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2017-01
New Economics Papers: this item is included in nep-gth, nep-hpe, nep-mic and nep-upt
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ftp://mse.univ-paris1.fr/pub/mse/CES2017/17011.pdf (application/pdf)

Related works:
Working Paper: Communicaiton games with optional verification (2018)
Working Paper: Communication games with optional verification (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:mse:cesdoc:17011

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