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Perturbed communication games with honest senders and naive receivers

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  • Chen, Ying
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    Abstract

    This paper studies communication games in which the sender is possibly honest (tells the truth) and the receiver is possibly naive (follows messages as if truthful). The characterization of message-monotone equilibria in the perturbed games explain several important aspects of strategic communication including sender exaggeration, receiver skepticism and message clustering. Surprisingly, the strategic receiver may respond to more aggressive claims with more moderate actions. In the limit as the probabilities of the non-strategic players approach zero, (i) the limit equilibrium corresponds to a most-informative equilibrium of the limit (Crawford-Sobel) game; (ii) only the top messages are sent.

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    File URL: http://www.sciencedirect.com/science/article/B6WJ3-50XCY91-1/2/76daa3fc229018b7a41486ddb706c665
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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Economic Theory.

    Volume (Year): 146 (2011)
    Issue (Month): 2 (March)
    Pages: 401-424

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    Handle: RePEc:eee:jetheo:v:146:y:2011:i:2:p:401-424

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    Web page: http://www.elsevier.com/locate/inca/622869

    Related research

    Keywords: Communication Honest senders Naive receivers Sender exaggeration Receiver skepticism Clustering of messages Non-monotone receiver reaction Finite message space Existence;

    References

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    1. Marco Ottaviani & Francesco Squintani, 2006. "Naive audience and communication bias," International Journal of Game Theory, Springer, vol. 35(1), pages 129-150, December.
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    4. Vincent P. Crawford, 2003. "Lying for Strategic Advantage: Rational and Boundedly Rational Misrepresentation of Intentions," American Economic Review, American Economic Association, vol. 93(1), pages 133-149, March.
    5. Sobel, Joel, 1985. "A Theory of Credibility," Review of Economic Studies, Wiley Blackwell, vol. 52(4), pages 557-73, October.
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    17. Stephen Morris, 2001. "Political Correctness," Journal of Political Economy, University of Chicago Press, vol. 109(2), pages 231-265, April.
    18. Forsythe, Robert & Lundholm, Russell & Rietz, Thomas, 1999. "Cheap Talk, Fraud, and Adverse Selection in Financial Markets: Some Experimental Evidence," Review of Financial Studies, Society for Financial Studies, vol. 12(3), pages 481-518.
    19. Manelli, Alejandro M, 1996. "Cheap Talk and Sequential Equilibria in Signaling Games," Econometrica, Econometric Society, vol. 64(4), pages 917-42, July.
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    Cited by:
    1. Daron Acemoglu & Alexander Wolitzky, 2012. "Cycles of Distrust: An Economic Model," Levine's Working Paper Archive 786969000000000502, David K. Levine.
    2. Andreas Blume & Ernest K. Lai & Wooyoung Lim, 2013. "Eliciting Private Information with Noise: The Case of Randomized Response," Working Papers 490, Bielefeld University, Center for Mathematical Economics.
    3. Irene Valsecchi, 2013. "Non-uniqueness of equilibrium action profiles with equal size in one-shot cheap-talk games," Theory and Decision, Springer, vol. 74(1), pages 31-53, January.
    4. Dziuda, Wioletta, 2011. "Strategic argumentation," Journal of Economic Theory, Elsevier, vol. 146(4), pages 1362-1397, July.
    5. Irene Valsecchi, 2013. "The expert problem: a survey," Economics of Governance, Springer, vol. 14(4), pages 303-331, November.

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