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Cheap Talk With Transparent Motives

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  • Elliot Lipnowski
  • Doron Ravid

Abstract

We study a model of cheap talk with one substantive assumption: The sender's preferences are state independent. Our main observation is that such a sender gains credibility by degrading self‐serving information. Using this observation, we examine the sender's benefits from communication, assess the value of commitment, and explicitly solve for sender‐optimal equilibria in three examples. A key result is a geometric characterization of the value of cheap talk, described by the quasiconcave envelope of the sender's value function.

Suggested Citation

  • Elliot Lipnowski & Doron Ravid, 2020. "Cheap Talk With Transparent Motives," Econometrica, Econometric Society, vol. 88(4), pages 1631-1660, July.
    • Handle: RePEc:wly:emetrp:v:88:y:2020:i:4:p:1631-1660
    DOI: 10.3982/ECTA15674
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    References listed on IDEAS

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