Toxic Types and Infectious Communication Breakdown

Kfir Eliaz and Alexander Frug

No 1224, Working Papers from Barcelona School of Economics

Abstract: We introduce a new channel for breakdown of cheap talk communication between an informed sender and an uninformed receiver. Our framework has the following novel feature: conditional on interacting, both parties agree on the optimal action in each state, but there are sender types with which the receiver prefers not to interact. We show that for a broad class of preferences, any interval equilibrium induces only finitely many actions in the support of the receiver's strategy. We also show that introducing a second stage with noisy signals on the sender type has a dramatic effect on the first-stage communication.

Keywords: Contagion; cheap talk (search for similar items in EconPapers)
JEL-codes: D83 (search for similar items in EconPapers)
Date: 2020-12
New Economics Papers: this item is included in nep-gth
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Working Paper: Toxic Types and Infectious Communication Breakdown (2020)
Working Paper: Toxic types and infectious communication breakdown (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:bge:wpaper:1224

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