Checking Cheap Talk

Ian Ball and Xin Gao

Papers from arXiv.org

Abstract: We consider a sender--receiver game in which the state is multidimensional and the receiver's action is binary. The sender always prefers the same action. The receiver can select one dimension of the state to verify. Despite the extreme conflict of interest, costless communication can be influential. We identify a class of symmetric equilibria in which the sender's message reveals which dimensions of the state are highest, and the receiver selects one of these dimensions to check. Using this construction, we characterize whether the sender benefits from communication. Similar equilibria exist when the receiver can check multiple dimensions.

Date: 2025-01
New Economics Papers: this item is included in nep-gth and nep-mic
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