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Goodwill in communication

Author

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  • Kuvalekar, Aditya
  • Lipnowski, Elliot
  • Ramos, João

Abstract

An expert advises a decision maker over time. With both the quality of advice and the extent to which it is followed remaining private, the players have limited information with which to discipline each other. Even so, communication in and of itself facilitates cooperation, the relationship evolving based on the expert's advice. We show a formal equivalence between our setting and one of cheap talk with capped money burning, enabling an exact characterization (at fixed discounting) of the expert's attainable payoffs. While an ongoing relationship often helps, our characterization implies that, absent feedback, relational incentives can never restore commitment.

Suggested Citation

  • Kuvalekar, Aditya & Lipnowski, Elliot & Ramos, João, 2022. "Goodwill in communication," Journal of Economic Theory, Elsevier, vol. 203(C).
    • Handle: RePEc:eee:jetheo:v:203:y:2022:i:c:s0022053122000576
    DOI: 10.1016/j.jet.2022.105467
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    Cited by:

    1. Pei, Harry, 2023. "Repeated communication with private lying costs," Journal of Economic Theory, Elsevier, vol. 210(C).
    2. Andrew T Little, 2023. "Bayesian explanations for persuasion," Journal of Theoretical Politics, , vol. 35(3), pages 147-181, July.

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    More about this item

    Keywords

    Cheap talk; Communication; Persuasion; Repeated game;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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