Two-sided strategic information transmission

Saori Chiba and Kazumi Hori

Games and Economic Behavior, 2022, vol. 134, issue C, 229-241

Abstract: We investigate a cheap talk model in which a decision maker and an expert are both privately informed. Both players observe independent signals that jointly determine ideal actions for the players, and the decision maker can send a cheap talk message to the expert, which is followed by the cheap talk of the expert and then the action of the decision maker. In equilibrium, the strategy of the decision maker is not monotonic, and the revelation of the decision maker concerning her information does not necessarily result in welfare improvement of the players. In particular, in models in which optimal actions are additively and/or multiplicatively separable in the information of two players and their preferences are represented by quadratic loss functions, the information revelation of the decision maker cannot facilitate information transmitted from the expert.

Keywords: Cheap talk; Two-sided asymmetric information; Two-way communication (search for similar items in EconPapers)
JEL-codes: D82 D83 (search for similar items in EconPapers)
Date: 2022
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Working Paper: Two-sided Strategic Information Transmission (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:134:y:2022:i:c:p:229-241

DOI: 10.1016/j.geb.2022.05.003

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