Communication, Risk and Efficiency in Games

Andreas Blume
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Andreas Blume: Univ. of Iowa

Game Theory and Information from EconWPA

Abstract: This paper studies the evolution of effective pre-play communication in games where a single communication round precedes a simultaneous-move, complete-information game. The paper identifies stable outcomes under population learning dynamics in which individuals with some probability replace their current strategy with a best reply against beliefs supported on a sample of currently used strategies. It is shown that under these conditions the effectiveness of one-sided pre-play communication is inversely related to risk in the underlying game, and to the size of the message space. Multi-sided communication can be shown to be more effective than one-sided communication; i.e., risk and the size of the message space play no role. This requires that all players communicate, have the same preferred equilibrium and messages have some small a priori information content that identifies message profiles that signal agreement on a strict equilibrium in the underlying game.

JEL-codes: C7 D8 (search for similar items in EconPapers)
Date: 1996-04-18
Note: Zipped using PKZIP v2.04, encoded using UUENCODE v5.15. Zipped file includes 1 file -- ui9603.wpa (Latex, 39 pages);
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpga:9604001

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