Strategic communication of narratives

Gerrit Bauch and Manuel Foerster

Papers from arXiv.org

Abstract: We model the communication of narratives as a cheap-talk game under model uncertainty. The sender has private information about the true data-generating process of public data. The receiver is uncertain about how to interpret the data, but aware of the sender's incentives to strategically provide interpretations ("narratives"). We introduce a general class of ambiguity rules resolving the receiver's residual uncertainty. Equilibria are characterized by partitions of narratives into intervals ("coarse narratives"). In particular, narratives are pooled not according to the similarity of their causal stories but according to the similarity of the optimal receiver actions associated with them. Furthermore, we establish that public data are difficult to 'explain' when some narratives imply similar yet distinct actions. Finally, the persuasive power of the sender is weaker in the sense of state-wise dominance than with a naive receiver.

Date: 2024-10, Revised 2026-10
New Economics Papers: this item is included in nep-gth, nep-mac, nep-mic and nep-upt
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