Strategic communication networks
AbstractIn this paper, we consider situations in which individuals want to choose an action close to others' actions as well as close to a payoff relevant state of nature with the ideal proximity to the common state varying across the agents. Before this coordination game with heterogeneous preferences is played, a cheap talk communication stage is offered to players who decide to whom they reveal the private information they hold about the state. The strategic information transmission taking place in the communication stage is characterized by a strategic communication network. We provide a direct link between players' preferences and the strategic communication network emerging at equilibrium, depending on the strength of the coordination motive and the prior information structure. Equilibrium strategic communication networks are characterized in a very tractable way and compared in term of efficiency. In general, a maximal strategic communication network may not exist and communication networks cannot be ordered in the sense of Pareto. However, expected social welfare always increases when the communication network expands. Strategic information transmission can be improved when group or public communication is allowed, and/or when information is certifiable.
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Date of creation: Mar 2008
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cheap talk ; coordination ; partially verifiable types ; public and private communication;
Other versions of this item:
- Jeanne Hagenbach & Frédéric Koessler, 2009. "Strategic Communication Networks," UniversitÃ© Paris1 PanthÃ©on-Sorbonne (Post-Print and Working Papers) halshs-00367692, HAL.
- Jeanne Hagenbach & Frédéric Koessler, 2009. "Strategic communication networks," Documents de travail du Centre d'Economie de la Sorbonne, UniversitÃ© PanthÃ©on-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne 09005, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-04-30 (All new papers)
- NEP-CSE-2011-04-30 (Economics of Strategic Management)
- NEP-CTA-2011-04-30 (Contract Theory & Applications)
- NEP-GTH-2011-04-30 (Game Theory)
- NEP-NET-2011-04-30 (Network Economics)
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