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Dynamic Strategic Information Transmission

Mikhail Golosov, Vasiliki Skreta (), Aleh Tsyvinski and Andrea Wilson
Additional contact information
Andrea Wilson: NYU

No 1802, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: This paper studies strategic information transmission in a dynamic environment where, each period, a privately informed expert sends a message and a decision maker takes an action. Our main result is that, in contrast to a static environment, full information revelation is possible. The gradual revelation of information and the eventual full revelation is supported by the dynamic rewards and punishments. The construction of a fully revealing equilibrium relies on two key features. The first feature is that the expert is incentivized, via appropriate actions, to join separable groups in which she initially pools with far-away types, then later reveals her type. The second feature is the use of trigger strategies. The decision maker is incentivized by the reward of further information revelation if he chooses the separation-inducing actions, and the threat of a stop in information release if he does not. Our equilibrium is non-monotonic. With monotonic partition equilibria, full revelation is impossible.

Keywords: Asymmetric information; Cheap talk; Dynamic strategic communication; Full information revelation (search for similar items in EconPapers)
JEL-codes: D82 D83 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cta and nep-gth
Date: 2011-05, Revised 2011-06
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Published in Journal of Economic Theory (May 2014), 151: 304-341

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http://cowles.yale.edu/sites/default/files/files/pub/d18/d1802.pdf (application/pdf)

Related works:
Journal Article: Dynamic strategic information transmission (2014) Downloads
Working Paper: Dynamic Strategic Information Transmission (2013) Downloads
Working Paper: Dynamic Strategic Information Transmission (2011) Downloads
Working Paper: Dynamic Strategic Information Transmission (2011) Downloads
Working Paper: Dynamic Strategic Information Transmission (2009)
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