Cheap Talk with an Informed Receiver

Junichiro Ishida and Takashi Shimizu

ISER Discussion Paper from Institute of Social and Economic Research, The University of Osaka

Abstract: This paper considers a model of strategic information transmission with an imperfectly informed receiver and provides a simple logic by which the receiver's prior knowledge becomes an impediment to efficient communication. We show that the extent of communication is severely limited as the receiver becomes more informed. Moreover, in a simple example with two signals, we show that no information can be conveyed via cheap talk for an arbitrarily small degree of preference incongruence. This result draws sharp contrast to the case with an uninformed receiver which always yields a fully separating equilibrium as long as the preferences are sufficiently congruent.

Date: 2009-06, Revised 2015-06
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Citations: View citations in EconPapers (14)

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Working Paper: Cheap Talk with an Informed Receiver (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:dpr:wpaper:0746r

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