When Can Communication Lead to Efficiency?

Itai Arieli, Yakov Babichenko, Atulya Jain and Rann Smorodinsky

Papers from arXiv.org

Abstract: We study games with incomplete information and characterize when a feasible outcome is Pareto efficient. We show that any outcome with excessive randomization over actions is inefficient. Generically, efficiency requires that the total number of actions taken across states be strictly less than the sum of the number of players and states. We then examine the efficiency of equilibrium outcomes in communication models. Generically, a cheap talk outcome is efficient only if it is pure. When the sender's payoff is state-independent, it is efficient if and only if the sender's most preferred action is chosen with certainty. In natural buyer-seller settings, Bayesian persuasion outcomes are inefficient across a wide range of priors and preferences. Finally, we show that our results apply to mechanism design problems with many players.

Date: 2025-10
New Economics Papers: this item is included in nep-des and nep-mic
References: Add references at CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2510.12508 Latest version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2510.12508

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().