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Cheap Talk with an Informed Receiver

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  • Junichiro Ishida
  • Takashi Shimizu

Abstract

This paper considers a model of strategic information transmission with an imperfectly informed receiver and provides a simple logic by which the receiver's prior knowledge becomes an impediment to efficient communication. We show that the extent of communication is severely limited as the receiver becomes more informed. Moreover, in a simple example with two signals, we show that no information can be conveyed via cheap talk for an arbitrarily small degree of preference incongruence. This result draws sharp contrast to the case with an uninformed receiver which always yields a fully separating equilibrium as long as the preferences are sufficiently congruent.

Suggested Citation

  • Junichiro Ishida & Takashi Shimizu, 2009. "Cheap Talk with an Informed Receiver," ISER Discussion Paper 0746r, Institute of Social and Economic Research, Osaka University, revised Jun 2015.
    • Handle: RePEc:dpr:wpaper:0746r
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    File URL: https://www.iser.osaka-u.ac.jp/library/dp/2009/DP0746R.pdf
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    References listed on IDEAS

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    7. Lai, Ernest K., 2014. "Expert advice for amateurs," Journal of Economic Behavior & Organization, Elsevier, vol. 103(C), pages 1-16.
    8. Kawamura, Kohei, 2013. "Eliciting information from a large population," Journal of Public Economics, Elsevier, vol. 103(C), pages 44-54.
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    11. 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.
    12. Galeotti, Andrea & Ghiglino, Christian & Squintani, Francesco, 2013. "Strategic information transmission networks," Journal of Economic Theory, Elsevier, vol. 148(5), pages 1751-1769.
    13. Junichiro Ishida, & Takashi Shimizu, 2012. "Can More Information Facilitate Communication?," ISER Discussion Paper 0839, Institute of Social and Economic Research, Osaka University.
    14. Crawford, Vincent P & Sobel, Joel, 1982. "Strategic Information Transmission," Econometrica, Econometric Society, vol. 50(6), pages 1431-1451, November.
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    Cited by:

    1. Junichiro Ishida & Takashi Shimizu, 2012. "Asking One Too Many? Why Leaders Need to Be Decisive," ISER Discussion Paper 0857, Institute of Social and Economic Research, Osaka University.
    2. Bilancini, Ennio & Boncinelli, Leonardo, 2018. "Signaling with costly acquisition of signals," Journal of Economic Behavior & Organization, Elsevier, vol. 145(C), pages 141-150.
    3. Alessandro Ispano & Péter Vida, 2020. "Custodial Interrogations," THEMA Working Papers 2020-05, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    4. Junichiro Ishida, 2009. "Why Hierarchy? Communication and Information Acquisition in Organizations," ISER Discussion Paper 0751, Institute of Social and Economic Research, Osaka University.
    5. Ying Chen & Sidartha Gordon, 2015. "Information transmission in nested sender–receiver games," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 58(3), pages 543-569, April.
    6. Chulyoung Kim & Paul S. Koh, 2020. "Court‐appointed experts and accuracy in adversarial litigation," International Journal of Economic Theory, The International Society for Economic Theory, vol. 16(3), pages 282-305, September.
    7. Junichiro Ishida, & Takashi Shimizu, 2012. "Can More Information Facilitate Communication?," ISER Discussion Paper 0839, Institute of Social and Economic Research, Osaka University.
    8. repec:hal:wpspec:info:hdl:2441/5adcidkke9omt0s9p6m01j1rh is not listed on IDEAS
    9. Joanna Franaszek, 2021. "When Competence Hurts: Revelation of Complex Information," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 3, pages 5-23.
    10. Saori Chiba & Kazumi Hori, 2020. "Two-sided Strategic Information Transmission," KIER Working Papers 1029, Kyoto University, Institute of Economic Research.
    11. Ispano, Alessandro, 2016. "Persuasion and receiver’s news," Economics Letters, Elsevier, vol. 141(C), pages 60-63.
    12. Francisco Silva, 2020. "Self-evaluations," Documentos de Trabajo 554, Instituto de Economia. Pontificia Universidad Católica de Chile..
    13. Yasuyuki Miyahara & Hitoshi Sadakane, 2020. "Communication Enhancement through Information Acquisition by Uninformed Player," KIER Working Papers 1050, Kyoto University, Institute of Economic Research.
    14. Alessandro Ispano & Peter Vida, 2021. "Designing Interrogations," THEMA Working Papers 2021-02, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    15. repec:hal:spmain:info:hdl:2441/5adcidkke9omt0s9p6m01j1rh is not listed on IDEAS
    16. Grillo, Edoardo, 2016. "The hidden cost of raising voters’ expectations: Reference dependence and politicians’ credibility," Journal of Economic Behavior & Organization, Elsevier, vol. 130(C), pages 126-143.

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