Dynamic cheap talk with static informational control

Alexander Frug

Economics Letters, 2016, vol. 143, issue C, 118-120

Abstract: Allowing for dynamic information control in Crawford and Sobel’s (1982) cheap-talk game can significantly improve the informativeness of communication. While the constructions offered in Ivanov (2014, 2015) significantly increase the amount of information transmitted in equilibrium, they rely on very demanding assumptions regarding the receiver’s ability to alter the sender’s information during the interim stages of communication. This note offers a new construction and shows that, for the uniform quadratic specification with constant sender’s bias, if the sender’s bias is sufficiently small, there exists a fully revealing equilibrium that does not require interim information control. Only the first-period signal is controlled ex ante, prior to any communication. The sender becomes completely informed at the end of period 2 regardless of his reporting strategy.

Keywords: Information control; Cheap talk; Pairing function (search for similar items in EconPapers)
JEL-codes: D8 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:143:y:2016:i:c:p:118-120

DOI: 10.1016/j.econlet.2016.04.003

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