We study strategic information transmission in an organization consisting of an infinite sequence of individual decision makers. Each decision maker chooses an action and receives an informative but imperfect signal of the once-and-for-all realization of an unobserved state. The state affects all individuals' preferences over present and future decisions. Decision makers do not directly observe the realized signals or actions of their predecessors. Instead, they must rely on cheap-talk messages in order to accumulate information about the state. Each decision maker is therefore both a receiver of information with respect to his decision, and a sender with respect to all future decisions. We show that if preferences are not perfectly aligned "full learning" equilibria - ones in which the individuals' posterior beliefs eventually place full weight on the true state - do not exist. This is so both in the case of private communication, in which each individual only hears the message of his immediate predecessor, and in the case of public communication, in which a decision maker hears the message of all his predecessors. Surprisingly, in the latter case full learning may be impossible even in the limit as all members of the organization become infinitely patient. We also consider the case where all individuals have access to a mediator who can work across time periods arbitrarily far apart. In this case full learning equilibria exist.
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Paper provided by Collegio Carlo Alberto in its series Carlo Alberto Notebooks with number
82.
Roger Lagunoff & Dino Gerardi & Luca Anderlini, 2008.
"Communication and Learning,"
Working Papers
gueconwpa~08-08-01, Georgetown University, Department of Economics.
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Anderlini, Luca & Gerardi, Dino & Lagunoff, Roger, 2008.
"Communication and Learning,"
Working Papers
37, Yale University, Department of Economics.
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Find related papers by JEL classification: C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Vijay Krishna & John Morgan, 1999.
"A Model of Expertise,"
Working Papers
154, Princeton University, Woodrow Wilson School of Public and International Affairs, Discussion Papers in Economics..
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