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Receiver’s dilemma

Hanjoon Michael Jung

Journal of Mathematical Economics, 2018, vol. 75, issue C, 116-124

Abstract: In a sender–receiver game, the sender’s concern for his credibility as a source of truthful information will boost his incentive to report truthfully. However, because his preferences over the outcomes differ from the receivers’, he still has an incentive to manipulate information in his favor. While the receivers comprehend this incentive, we nevertheless show that they do not ignore his message and play according to his preferences, which leads to his (not their) favorite outcome. This is the dilemma that the receivers are faced with. We identify a generic game that shows this receiver’s dilemma.

Keywords: Credibility; Information manipulation; Receiver’s dilemma; Sender–receiver game (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:eee:mateco:v:75:y:2018:i:c:p:116-124