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Two-sided Strategic Information Transmission

Saori Chiba and Kazumi Hori ()
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Kazumi Hori: Kyoto University, Graduate School of Economics

No 1029, KIER Working Papers from Kyoto University, Institute of Economic Research

Abstract: We study a cheap talk model in which a decision maker and an expert are both privately informed. Both players observe independent signals that jointly determine ideal actions for the players. Furthermore, in our model, the decision maker can send a cheap talk message to the expert, which is followed by the expert’s cheap talk and then the decision maker’s decision making. We show that the informed decision maker can informatively reveal her private information to the expert but her talk does not affect the quality of the expert’s information transmission in models in which optimal actions are only additively or multiplicatively separable in the two players’ information, and their preferences are represented by quadratic loss functions. We also apply our finding to a decision maker’s information acquisition problem.

Keywords: Cheap Talk; Two-Sided Asymmetric Information; Two-Way Communication (search for similar items in EconPapers)
JEL-codes: D82 D83 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2020-04
New Economics Papers: this item is included in nep-gth, nep-mic and nep-ore
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