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Multistage communication with and without verifiable types

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  • Frederic Koessler

    ()
    (THEMA, Université de Cergy-Pontoise)

  • Francoise Forges

    ()
    (CEREMADE, Paris-Dauphine University)

Abstract

We survey the main results on strategic information transmission, which is often referred to as ``persuasion" when types are verifiable and as ``cheap talk" when they are not. In the simplest ``cheap talk'' model, an informed player sends a single message to a receiver who makes a decision. The players' utilities depend on the sender's information and the receiver's decision, but not on the sender's message. Furthermore, the messages that are available to the sender do not depend on his true information. As is well-known, such a unilateral ``cheap talk" can affect the sender's decision at equilibrium. In a more general model, both players can exchange simultaneous costless messages during several stages before the final decision. The utility functions are unchanged. Multistage conversation allows the players to reach more equilibrium outcomes, which possibly Pareto dominate the original ones. More precisely, the set of equilibrium outcomes of long cheap talk games is fully characterized; it increases with the number of communication stages and can become even larger if no deadline is imposed. Concentrating on cheap talk is not appropriate if the informed player can influence the decision maker by producing unfalsifiable documents. In order to capture this possibility formally, one assumes that the informed player's set of messages depends on his private information. The literature has mostly dealt with unilateral persuasion. But multistage, bilateral communication enables the players to reach more equilibrium outcomes in the case of verifiable types as in the case of unverifiable ones. Equilibria of long persuasion games are fully characterized when information can be certified at any precision level.

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Bibliographic Info

Paper provided by THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise in its series THEMA Working Papers with number 2006-14.

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Date of creation: Sep 2006
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Handle: RePEc:ema:worpap:2006-14

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Keywords: Cheap talk; certification; incomplete information; information transmission; jointly controlled lotteries; verifiable types;

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  1. Blume, A., 1991. "Equilibrium Refinement in Sender-Receiver Games," Working Papers 91-28, University of Iowa, Department of Economics.
  2. V. Crawford & J. Sobel, 2010. "Strategic Information Transmission," Levine's Working Paper Archive 544, David K. Levine.
  3. Renault, Jérôme, 2000. "On Two-Player Repeated Games with Lack of Information on One Side and State-Independent Signalling," Economics Papers from University Paris Dauphine 123456789/6109, Paris Dauphine University.
  4. Daniel J. Seidmann & Eyal Winter, 1997. "Strategic Information Transmission with Verifiable Messages," Econometrica, Econometric Society, vol. 65(1), pages 163-170, January.
  5. Jérôme Renault, 2001. "3-player repeated games with lack of information on one side," International Journal of Game Theory, Springer, vol. 30(2), pages 221-245.
  6. Robert J. Aumann, 1995. "Repeated Games with Incomplete Information," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011476, December.
  7. Watson, Joel, 1996. "Information Transmission When the Informed Party Is Confused," Games and Economic Behavior, Elsevier, vol. 12(1), pages 143-161, January.
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Cited by:
  1. Mikhail Golosov, 2009. "Dynamic Strategic Information Transmission," 2009 Meeting Papers 181, Society for Economic Dynamics.
  2. Frédéric Loss & Estelle Malavolti & Thibaud Vergé, 2013. "Communication and Binary Decisions: Is it Better to Communicate?," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 169(3), pages 451-467, September.
  3. Forges, Françoise & Vida, Péter, 2013. "Implementation of Communication Equilibria by Correlated Cheap Talk : the Two-Player Case," Economics Papers from University Paris Dauphine 123456789/8159, Paris Dauphine University.

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