Bayesian Doublespeak

Ing-Haw Cheng () and Alice Hsiaw
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Ing-Haw Cheng: University of Toronto

No 135, Working Papers from Brandeis School of Business and Economics

Abstract: We show that misinformation distorts long-run beliefs in “doublespeak’’ equilibria of a cheap talk game where receivers are uncertain of a state and the sender’s type. A sender type who prefers receivers take wrong actions sends messages that plausibly come from a good type under a different state. Even after observing infinite messages, receivers disagree about the state and take different ex-post actions. A policymaker who believes that doublespeak would mislead receivers may restrict the sender to finite messages. An option for receivers to fact-check messages does not limit doublespeak, but sender concerns about reputation can.

Pages: 55 pages
Date: 2023-07
New Economics Papers: this item is included in nep-gth and nep-mic
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