Information Aggregation in Multidimensional Cheap Talk

Daniel Habermacher

No 169, Working Papers from Red Nacional de Investigadores en Economía (RedNIE)

Abstract: I examine a cheap talk game with multiple interdependent decisions, in which biased senders privately observe information about payoff-relevant states. I find that senders are willing to use open (state-specific) communication channels to strategically convey information about other states that otherwise cannot be revealed. In equilibrium, this leads to a loss of credibility that reduces the set of parameters for which communication is incentive compatible. The credibility loss associated with a sender arises when a given piece of information is relevant for both low- and high-conflict decisions. Surprisingly, when the receiver is expected to observe more of such information on path,the associated credibility loss recedes—i.e. the sender is more willing to reveal information that is only relevant for low-conflict decisions. Finally, I fully characterize the communication equilibrium in a simple version of the model, which I use as baseline to analyze the interaction between informational interdependence and preferences for coordinated decisions.

Keywords: Information Economics; Cheap Talk; Multidimensional Communication (search for similar items in EconPapers)
JEL-codes: D21 D83 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2022-08
New Economics Papers: this item is included in nep-gth and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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