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Simple Mediation in a Cheap-Talk Game

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  • Chirantan Ganguly
  • Indrajit Ray

Abstract

In the Crawford-Sobel (uniform, quadratic utility) cheap-talk model, we consider a simple mediation scheme (a communication device) in which the informed agent reports one of N possible elements of a partition to the mediator and then the mediator suggests one of N actions to the uninformed decision-maker according to the probability distribution of the device. We show that such a simple mediated equilibrium cannot improve upon the unmediated N-partition Crawford-Sobel equilibrium when the preference divergence parameter (bias) is small.

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Bibliographic Info

Paper provided by Department of Economics, University of Birmingham in its series Discussion Papers with number 05-08r.

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Length: 17 pages
Date of creation: Nov 2009
Date of revision:
Handle: RePEc:bir:birmec:05-08r

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Postal: Edgbaston, Birmingham, B15 2TT
Web page: http://www.economics.bham.ac.uk
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Keywords: Cheap Talk; Mediated Equilibrium;

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  1. Péter Vida & Francoise Forges, 2011. "Implementation of Communication Equilibria by Correlated Cheap Talk: The Two-Player Case," CESifo Working Paper Series 3360, CESifo Group Munich.
  2. Aumann, Robert J., 1974. "Subjectivity and correlation in randomized strategies," Journal of Mathematical Economics, Elsevier, vol. 1(1), pages 67-96, March.
  3. FORGES, Françoise, 2006. "Correlated equilibrium in games with incomplete information revisited," CORE Discussion Papers 2006041, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. Aumann, Robert J, 1987. "Correlated Equilibrium as an Expression of Bayesian Rationality," Econometrica, Econometric Society, vol. 55(1), pages 1-18, January.
  5. FORGES , Françoise, 1993. "Five Legitimate Definitions of Correlated Equilibrium in Games with Incomplete Information," CORE Discussion Papers 1993009, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Dessein, Wouter, 2002. "Authority and Communication in Organizations," Review of Economic Studies, Wiley Blackwell, vol. 69(4), pages 811-38, October.
  7. Crawford, Vincent P & Sobel, Joel, 1982. "Strategic Information Transmission," Econometrica, Econometric Society, vol. 50(6), pages 1431-51, November.
  8. 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.
  9. Andreas Blume & Oliver Board & Kohei Kawamura, 2007. "Noisy Talk," ESE Discussion Papers 167, Edinburgh School of Economics, University of Edinburgh.
  10. Ying Chen & Navin Kartik & Joel Sobel, 2008. "Selecting Cheap-Talk Equilibria," Econometrica, Econometric Society, vol. 76(1), pages 117-136, 01.
  11. Kovác, Eugen & Mylovanov, Tymofiy, 2009. "Stochastic mechanisms in settings without monetary transfers: The regular case," Journal of Economic Theory, Elsevier, vol. 144(4), pages 1373-1395, July.
  12. Ivanov, Maxim, 2010. "Communication via a strategic mediator," Journal of Economic Theory, Elsevier, vol. 145(2), pages 869-884, March.
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