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Cheap Talk and Burned Money

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  • Austen-Smith, David
  • Banks, Jeffrey S.

Abstract

We augment the standard Crawford-Sobel (Econometrica 1982) model of cheap talk communication by allowing the informed party to use both costless and costly messages. The issues on which we focus are the consequences for cheap talk signaling of the option to use a costly signal ("burned money"); the circumstances under which both cheap talk and burned money are used to signal information; and the extent to which burning money is the preferred instrument for information transmission.

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Bibliographic Info

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

Volume (Year): 91 (2000)
Issue (Month): 1 (March)
Pages: 1-16

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Handle: RePEc:eee:jetheo:v:91:y:2000:i:1:p:1-16

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

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  1. Rabin, Matthew, 1990. "Communication between rational agents," Journal of Economic Theory, Elsevier, Elsevier, vol. 51(1), pages 144-170, June.
  2. Farrell, Joseph & Gibbons, Robert, 1989. "Cheap Talk with Two Audiences," American Economic Review, American Economic Association, American Economic Association, vol. 79(5), pages 1214-23, December.
  3. Farrell, Joseph, 1986. "Meaning and Credibility in Cheap-Talk Games," Department of Economics, Working Paper Series, Department of Economics, Institute for Business and Economic Research, UC Berkeley qt4968n3fz, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  4. A. Blume & Y. G. Kim & J. Sobel, 2010. "Evolutionary Stability in Games of Communication," Levine's Working Paper Archive 530, David K. Levine.
  5. Blume, A., 1992. "Equilibrium Refinements in Sender-Receiver Games," Working Papers, University of Iowa, Department of Economics 92-12, University of Iowa, Department of Economics.
  6. repec:fth:stanho:e-89-7 is not listed on IDEAS
  7. Damme, E.E.C. van, 1989. "Stable equilibria and forward induction," Open Access publications from Tilburg University urn:nbn:nl:ui:12-154422, Tilburg University.
  8. van Damme,Eric, 1987. "Stable equilibria and forward induction," Discussion Paper Serie A 128, University of Bonn, Germany.
  9. Joseph E. Harrington, 1992. "The Revelation Of Information Through The Electoral Process: An Exploratory Analysis," Economics and Politics, Wiley Blackwell, Wiley Blackwell, vol. 4(3), pages 255-276, November.
  10. Matthews, Steven A, 1989. "Veto Threats: Rhetoric in a Bargaining Game," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 104(2), pages 347-69, May.
  11. V. Crawford & J. Sobel, 2010. "Strategic Information Transmission," Levine's Working Paper Archive 544, David K. Levine.
  12. Gilligan, Thomas W & Krehbiel, Keith, 1987. "Collective Decisionmaking and Standing Committees: An Informational Rationale for Restrictive Amendment Procedures," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 3(2), pages 287-335, Fall.
  13. Austen-Smith David, 1993. "Interested Experts and Policy Advice: Multiple Referrals under Open Rule," Games and Economic Behavior, Elsevier, vol. 5(1), pages 3-43, January.
  14. Robert Gibbons & Joseph Farrell, 1988. "Cheap Talk Can Matter in Bargaining," Working papers 482, Massachusetts Institute of Technology (MIT), Department of Economics.
  15. Matthews, Steven A. & Okuno-Fujiwara, Masahiro & Postlewaite, Andrew, 1991. "Refining cheap-talk equilibria," Journal of Economic Theory, Elsevier, Elsevier, vol. 55(2), pages 247-273, December.
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