Cheap Talk on the Circle

Dragan Filipovich
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Dragan Filipovich: COLMEX

No 114, 2007 Meeting Papers from Society for Economic Dynamics

Abstract: In this paper we modify the `cheap-talk' model of Crawford and Sobel 1982 by taking the state space to correspond to a circle (instead of a line). It is shown that in such a setup the relationship between the `bias' (i.e., the parameter capturing the divergence of interests between sender and receiver), and the `informativeness' of equilibria, is reversed from what it is in the original Crawford and Sobel story: Now, a higher bias can be associated with more informative equilibria, rather than the other way around. We also attempt to characterize more generally the equilibria of this modified model.

Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed007:114

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