Repeated Communication with Private Lying Cost

Harry Pei

Papers from arXiv.org

Abstract: I study repeated communication games between a patient sender and a sequence of receivers. The sender has persistent private information about his psychological cost of lying, and in every period, can privately observe the realization of an i.i.d. state before communication takes place. I characterize every type of sender's highest equilibrium payoff. When the highest lying cost in the support of the receivers' prior belief approaches the sender's benefit from lying, every type's highest equilibrium payoff in the repeated communication game converges to his equilibrium payoff in a one-shot Bayesian persuasion game. I also show that in every sender-optimal equilibrium, no type of sender mixes between telling the truth and lying at every history. When there exist ethical types whose lying costs outweigh their benefits, I provide necessary and sufficient conditions for all non-ethical type senders to attain their optimal commitment payoffs. I identify an outside option effect through which the possibility of being ethical decreases every non-ethical type's payoff.

Date: 2020-06
New Economics Papers: this item is included in nep-gth and nep-mic
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