Nash Equilibrium and information transmission coding and decoding rules
AbstractThe 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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Bibliographic InfoPaper provided by University of Valencia, ERI-CES in its series Discussion Papers in Economic Behaviour with number 0910.
Date of creation: Jul 2010
Date of revision:
Noisy channel; Shannon's Theorem; sender-receiver games; Nash equilibrium;
Find related papers by JEL classification:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-07-24 (All new papers)
- NEP-CTA-2010-07-24 (Contract Theory & Applications)
- NEP-GTH-2010-07-24 (Game Theory)
- NEP-HPE-2010-07-24 (History & Philosophy of Economics)
- NEP-ICT-2010-07-24 (Information & Communication Technologies)
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- 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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