Information Design in Cheap Talk

Qianjun Lyu () and Wing Suen

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: An uninformed sender publicly commits to an informative experiment about an uncertain state, privately observes its outcome, and sends a cheap-talk message to a receiver. We provide an algorithm valid for arbitrary state-dependent preferences that will determine the sender’s optimal experiment and his equilibrium payoff under binary state space. We give sufficient conditions for information design to be valuable or not under different payoff structures. These conditions depend more on marginal incentives - how payoffs vary with the state - than on the alignment of sender’s and receiver’s rankings over actions within a state. The algorithm can be easily modified to study canonical cheap talk games with a perfectly informed sender.

Keywords: marginal incentives; common interest; concave envelope; quasiconcave envelope; double randomization (search for similar items in EconPapers)
JEL-codes: D82 D83 (search for similar items in EconPapers)
Pages: 44
Date: 2023-10
New Economics Papers: this item is included in nep-cta, nep-exp, nep-gth and nep-mic
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https://www.crctr224.de/research/discussion-papers/archive/dp470 (application/pdf)

Related works:
Working Paper: Information Design in Cheap Talk (2024)
Working Paper: Information Design in Cheap Talk (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:bon:boncrc:crctr224_2023_470

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