Verifiability and neologism-proofness in a Sender–Receiver game

This paper contributes to the literature on information transmission in Sender–Receiver games. We compare cheap-talk games to games with verifiable messages (persuasion games). We consider equilibria in which the Sender’s private information (type) is fully revealed to the Receiver. We show that if a fully revealing perfect Bayesian equilibrium (PBE) exists when talk is cheap, then one also exists when messages are verifiable. We also show that this is not the case for neologism-proof PBE’s. We construct an example in which full revelation can be sustained as a neologism-proof PBE outcome when talk is cheap, but not when messages are verifiable.

► We consider fully revealing equilibria (FRE’s) of cheap-talk games.
► Verifiability of messages helps to support FRE existence.
► No longer true if equilibria are required to be neologism-proof.
► We construct an example to illustrate.