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Noisy talk

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Author Info

  • Board, Oliver J.

    ()
    (University of Pittsburgh)

  • Blume, Andreas

    ()
    (University of Pittsburgh)

  • Kawamura, Kohei

    ()
    (University of Edinburgh)

Abstract

We investigate strategic information transmission with communication error, or noise. Our main finding is that adding noise can improve welfare. With quadratic preferences and a uniform type distribution, welfare can be raised for almost every bias level by introducing a sufficiently small amount of noise. Furthermore, there exists a level of noise that makes it possible to achieve the best payoff that can be obtained by means of any communication device. As in the model without noise, equilibria are interval partitional; with noise, however, coding (the measure of the message space used by each interval of the equilibrium partition of the type space) becomes critically important.

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Bibliographic Info

Article provided by Econometric Society in its journal Theoretical Economics.

Volume (Year): 2 (2007)
Issue (Month): 4 (December)
Pages:

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Handle: RePEc:the:publsh:263

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Web page: http://econtheory.org

Related research

Keywords: Communication; information transmission; cheap talk; noise;

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  1. Robert J. Aumann & Sergiu Hart, 2003. "Long Cheap Talk," Econometrica, Econometric Society, vol. 71(6), pages 1619-1660, November.
  2. Olszewski, Wojciech, 2004. "Informal communication," Journal of Economic Theory, Elsevier, vol. 117(2), pages 180-200, August.
  3. Morgan, J. & Stocken, P., 1998. "An Analysis of Stock Recommendations," Papers 204, Princeton, Woodrow Wilson School - Public and International Affairs.
  4. Kartik, Navin & Ottaviani, Marco & Squintani, Francesco, 2007. "Credulity, lies, and costly talk," Journal of Economic Theory, Elsevier, vol. 134(1), pages 93-116, May.
  5. Goltsman, Maria & Hörner, Johannes & Pavlov, Gregory & Squintani, Francesco, 2009. "Mediation, arbitration and negotiation," Journal of Economic Theory, Elsevier, vol. 144(4), pages 1397-1420, July.
  6. Krishna, Vijay & Morgan, John, 2004. "The art of conversation: eliciting information from experts through multi-stage communication," Journal of Economic Theory, Elsevier, vol. 117(2), pages 147-179, August.
  7. Austen-Smith, David, 1994. "Strategic Transmission of Costly Information," Econometrica, Econometric Society, vol. 62(4), pages 955-63, July.
  8. FORGES, Françoise, . "An approach to communication equilibria," CORE Discussion Papers RP -721, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  9. Navin Kartik, 2005. "Information Transmission with Cheap and Almost-Cheap Talk," NajEcon Working Paper Reviews 666156000000000650, www.najecon.org.
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