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Nash Equilibrium and information transmission coding and decoding rules

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Author Info

  • Penelope Hernandez

    ()
    (ERI-CES)

  • Amparo Urbano Salvador

    ()
    (ERI-CES)

  • Jose E. Vila

    ()
    (ERI-CES)

Abstract

The design of equilibrium protocols in sender-receiver games where communication is noisy occupies an important place in the Economic literature. This paper shows that the common way of constructing a noisy channel communication protocol in Information Theory does not necessarily lead to a Nash equilibrium. Given the decoding scheme, it may happen that, given some state, it is better for the sender to transmit a message that is different from that prescribed by the codebook. Similarly, when the sender uses the codebook as prescribed, the receiver may sometimes prefer to deviate from the decoding scheme when receiving a message.

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File URL: http://www.uv.es/erices/RePEc/WP/2010/0910.pdf
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Bibliographic Info

Paper provided by University of Valencia, ERI-CES in its series Discussion Papers in Economic Behaviour with number 0910.

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Date of creation: Jul 2010
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Handle: RePEc:dbe:wpaper:0910

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Related research

Keywords: Noisy channel; Shannon's Theorem; sender-receiver games; Nash equilibrium;

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Cited by:
  1. Penélope Hernández & Bernhard von Stengel, 2012. "Nash Codes for Noisy Channels," Discussion Papers in Economic Behaviour 0912, University of Valencia, ERI-CES.

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