Ambiguous Cheap Talk

Longjian Li

Papers from arXiv.org

Abstract: This paper explores how ambiguity affects communication. We consider a cheap talk model in which the receiver evaluates the sender's message with respect to its worst-case expected payoff generated by multiplier preferences. We characterize the receiver's optimal strategy and show that the receiver's posterior action is consistent with his ex-ante action. We find that in some situations, ambiguity improves communication by shifting the receiver's optimal action upwards, and these situations are not rare.

Date: 2022-09
New Economics Papers: this item is included in nep-gth and nep-mic
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