Article ID Journal Published Year Pages File Type
5071335 Games and Economic Behavior 2017 22 Pages PDF
Abstract
We study cheap talk communication in a simple two actions-two states model featuring an ambiguous state distribution. Equilibrium behavior of both sender (S) and receiver (R) features mixing and we relate each agent's randomization to a specific mode of ambiguous communication. For sufficiently high ambiguity, implementing the S-optimal decision rule with only two messages is impossible if R has aligned preferences. This may in contrast be possible if R has misaligned preferences. Adding a little ambiguity may generate influential communication that is unambiguously advantageous to S.
Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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