Communication games with optional verification

Simon Schopohl
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Simon Schopohl: Center for Mathematical Economics, Bielefeld University

No 569, Center for Mathematical Economics Working Papers from Center for Mathematical Economics, Bielefeld University

Abstract: We consider a Sender-Receiver game in which the Sender can choose between sending a cheap-talk message, which is costless, but also not verified and a costly verified message. While the Sender knows the true state of the world, the Receiver does not have this information, but has to choose an action depending on the message he receives. The action then yields to some utility for Sender and Receiver. We only make a few assumptions about the utility functions of both players, so situations may arise where the Sender’s preferences are such that she sends a message trying to convince the Receiver about a certain state of the world, which is not the true one. In a finite setting we state conditions for full revelation, i.e. when the Receiver always learns the truth. Furthermore we describe the player’s behavior if only partial revelation is possible. For a continuous setting we show that additional conditions have to hold and that these do not hold for "smooth" preferences and utility, e.g. in the classic example of quadratic loss utilities.

Keywords: cheap-talk; communication; costly disclosure; full revelation; increasing differences; Sender-Receiver game; verifiable information (search for similar items in EconPapers)
Date: 2016-12-23
New Economics Papers: this item is included in nep-mic and nep-upt
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https://pub.uni-bielefeld.de/download/2907692/2907693 First Version, 2016 (application/x-download)

Related works:
Working Paper: Communicaiton games with optional verification (2018)
Working Paper: Communication Games with Optional Verification (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:bie:wpaper:569

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