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Multiple Referrals and Multidimensional Cheap Talk

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Author Info
Marco Battaglini (Northwestern University)

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Abstract

Cheap talk games have been widely used to analyze situations in which a policy maker needs expert advice. In previous work, agent uncertainty has almost always been modeled using a single-dimensional state variable. In this paper we prove that the dimensionality of the uncertain variable has an important qualitative impact on results and yields interesting insights into the 'mechanics' of information transmission. Contrary to the unidimensional case, with more than one dimension full transmission of information in all states of nature is typically possible, provided a very simple and intuitive condition is satisfied. When utilities are quadratic and there are simultaneous reports, linear independence of senders' ideal points is a sufficient condition to guarantee full revelation; with sequential reports, linear independence and a simple condition on the gradients of senders' utilities at the receiver's ideal point are sufficient. In particular as an application of the theory we are able to explain an empirical puzzle related to informational theories of legislative organization. These theories predict that legislative committees (senders) should have strong alignment of preferences with the Floor; but this doesn't fit with empirical facts. We prove that what really matters in transmission of information is the local behavior of the utilities of the senders at the ideal point of the policy maker (receiver), not the distances between the ideal points of players. We interpret this as an argument in support of informational theories of legislative organizations.

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Publisher Info
Paper provided by Econometric Society in its series Econometric Society World Congress 2000 Contributed Papers with number 1557.

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Date of creation: 01 Aug 2000
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Handle: RePEc:ecm:wc2000:1557

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Daniel Diermeier & Timothy J. Feddersen, 1998. "Information and Congressional Hearings," Discussion Papers 1236, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
  2. Baliga, Sandeep, 1999. "Monitoring and Collusion with "Soft" Information," Journal of Law, Economics and Organization, Oxford University Press, vol. 15(2), pages 434-40, July.
  3. Farrell, J. & Gibbons, R., 1989. "Cheap Talk With Two Audiences," Working papers 518, Massachusetts Institute of Technology (MIT), Department of Economics.
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  4. Krishna, V. & Morgan, J., 1999. "A Model of Expertise," Papers 206, Princeton, Woodrow Wilson School - Public and International Affairs.
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  5. Gilligan, Thomas W. & Krehbiel, Keith., 1987. "Collective Decision-Making and Standing Committees: An Informational Rational for Restrictive Amendment Procedures," Working Papers 632, California Institute of Technology, Division of the Humanities and Social Sciences. [Downloadable!]
  6. Paul Milgrom & John Roberts, 1986. "Relying on the Information of Interested Parties," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 18-32, Spring. [Downloadable!] (restricted)
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  7. Crawford, Vincent P & Sobel, Joel, 1982. "Strategic Information Transmission," Econometrica, Econometric Society, vol. 50(6), pages 1431-51, November. [Downloadable!] (restricted)
  8. 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. [Downloadable!] (restricted)
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