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Multidimensional Cheap Talk

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  • Levy, Gilat
  • Razin, Ronny

Abstract

In this Paper we extend the cheap talk model of Crawford and Sobel (1982) to a multidimensional state space and policy space. We provide a characterization of equilibria. We focus on the question of feasibility of information transmission, for large degrees of conflict of interests between the sender and the receiver. We show that it is possible to construct equilibria with information transmission even for unboundedly large conflicts, but that any such equilibrium is based on knife-edge assumptions. We prove that influential equilibria are non-generic when the conflict between the sender and the receiver is large enough. Thus, adding more dimensions cannot improve upon information revelation when interests are too divergent.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4393.

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Date of creation: May 2004
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Handle: RePEc:cpr:ceprdp:4393

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Related research

Keywords: cheap talk; lobbying; political economy;

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References

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  1. Krishna, V. & Morgan, J., 1999. "A Model of Expertise," Papers 206, Princeton, Woodrow Wilson School - Public and International Affairs.
  2. Stephen Morris, 2001. "Political Correctness," Journal of Political Economy, University of Chicago Press, vol. 109(2), pages 231-265, April.
  3. Dessein, Wouter, 2002. "Authority and Communication in Organizations," Review of Economic Studies, Wiley Blackwell, vol. 69(4), pages 811-38, October.
  4. Farrell, J. & Gibbons, R., 1989. "Cheap Talk With Two Audiences," Working papers 518, Massachusetts Institute of Technology (MIT), Department of Economics.
  5. 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.
  6. Marco Battaglini, 1999. "Multiple Referrals and Multidimensional Cheap Talk," Discussion Papers 1295, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  7. Wolinsky, Asher, 2002. "Eliciting information from multiple experts," Games and Economic Behavior, Elsevier, vol. 41(1), pages 141-160, October.
  8. repec:fth:stanho:e-89-7 is not listed on IDEAS
  9. 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, vol. 3(2), pages 287-335, Fall.
  10. Battaglini Marco, 2004. "Policy Advice with Imperfectly Informed Experts," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 4(1), pages 1-34, April.
  11. David Spector, 2000. "Rational Debate And One-Dimensional Conflict," The Quarterly Journal of Economics, MIT Press, vol. 115(1), pages 181-200, February.
  12. Trueman, Brett, 1994. "Analyst Forecasts and Herding Behavior," Review of Financial Studies, Society for Financial Studies, vol. 7(1), pages 97-124.
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Citations

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Cited by:
  1. Mikhail Golosov & Vasiliki Skreta & Aleh Tsyvinski & Andrea Wilson, 2011. "Dynamic Strategic Information Transmission," Working Papers 11-17, New York University, Leonard N. Stern School of Business, Department of Economics.
  2. Alistair Wilson & Emanuel Vespa, 2012. "Communication With Multiple Senders and Multiple Dimensions: An Experiment," Working Papers 461, University of Pittsburgh, Department of Economics, revised Sep 2012.
  3. Cornelia Holthausen & Thomas Rønde, 2003. "Cooperation in International Banking Supervision," CIE Discussion Papers 2004-02, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
  4. Szalay, Dezsö, 2012. "Strategic information transmission and stochastic orders," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 386, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  5. A.K.S. Chand, 2012. "Strategic Information Transmission with Budget Constraint," Working Papers 2012_19, Department of Economics, University of Venice "Ca' Foscari".
  6. Di Maggio, Marco, 2009. "Accountability and Cheap Talk," MPRA Paper 18652, University Library of Munich, Germany.
  7. Junghun Cho, 2006. "Multiple Advisors with Reputation," CERGE-EI Working Papers wp314, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  8. Archishman Chakraborty & Rick Harbaugh, 2004. "Comparative Cheap Talk," Working Papers 2004-08, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
  9. Alistair J. Wilson & Emanuel Vespa, 2012. "Communication With Multiple Senders and Multiple Dimensions: An Experiment," Working Papers 384, University of Pittsburgh, Department of Economics, revised Mar 2012.

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