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Nash Equilibrium and information transmission coding and decoding rules

Author

Listed:
  • 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.

Suggested Citation

  • Penelope Hernandez & Amparo Urbano Salvador & Jose E. Vila, 2010. "Nash Equilibrium and information transmission coding and decoding rules," Discussion Papers in Economic Behaviour 0910, University of Valencia, ERI-CES.
    • Handle: RePEc:dbe:wpaper:0910
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    File URL: https://www.uv.es/erices/RePEc/WP/2010/0910.pdf
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    Cited by:

    1. Penélope Hernández & Bernhard von Stengel, 2014. "Nash Codes for Noisy Channels," Operations Research, INFORMS, vol. 62(6), pages 1221-1235, December.

    More about this item

    Keywords

    Noisy channel; Shannon's Theorem; sender-receiver games; Nash equilibrium;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics

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