Nash Equilibrium and information transmission coding and decoding rules

Penelope Hernandez (), Amparo Urbano and Jose Vila ()

No 910, Discussion Papers in Economic Behaviour from University of Valencia, ERI-CES

Abstract: The design of equilibrium protocols in sender-receiver games where communication is noisy occupies an important place in the Economic literature. This paper shows that the common way of constructing a noisy channel communication protocol in Information Theory does not necessarily lead to a Nash equilibrium. Given the decoding scheme, it may happen that, given some state, it is better for the sender to transmit a message that is different from that prescribed by the codebook. Similarly, when the sender uses the codebook as prescribed, the receiver may sometimes prefer to deviate from the decoding scheme when receiving a message.

Keywords: Noisy channel; Shannon's Theorem; sender-receiver games; Nash equilibrium (search for similar items in EconPapers)
JEL-codes: C02 C72 (search for similar items in EconPapers)
Date: 2010-07
New Economics Papers: this item is included in nep-cta, nep-gth, nep-hpe and nep-ict
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:dbe:wpaper:0910

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