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Strategic communication networks

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  • Jeanne Hagenbach

    (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, UP1 - Université Paris 1, Panthéon-Sorbonne - Université Paris I - Panthéon-Sorbonne - PRES HESAM)

  • Frédéric Koessler

    (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)

Abstract

In 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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Bibliographic Info

Paper provided by HAL in its series PSE Working Papers with number halshs-00586847.

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Date of creation: Mar 2008
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Handle: RePEc:hal:psewpa:halshs-00586847

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Keywords: cheap talk ; coordination ; partially verifiable types ; public and private communication;

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References

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  1. Van Zandt, Timothy & Vives, Xavier, 2007. "Monotone equilibria in Bayesian games of strategic complementarities," Journal of Economic Theory, Elsevier, Elsevier, vol. 134(1), pages 339-360, May.
  2. Antoni Calvó-Armengol & Joan de Martí, 2007. "Communication Networks: Knowledge and Decisions," American Economic Review, American Economic Association, American Economic Association, vol. 97(2), pages 86-91, May.
  3. Okuno-Fujiwara, Masahiro & Postlewaite, Andrew & Suzumura, Kotaro, 1990. "Strategic Information Revelation," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 57(1), pages 25-47, January.
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Cited by:
  1. Bimpikis, Kostas & Ozdaglar, Asuman & Acemoglu, Daron, 2014. "Dynamics of information exchange in endogenous social networks," Theoretical Economics, Econometric Society, Econometric Society, vol. 9(1), January.
  2. Berno Buechel & Tim Hellmann & Stefan Kölßner, 2014. "Opinion Dynamics and Wisdom under Conformity," Working Papers, Fondazione Eni Enrico Mattei 2014.51, Fondazione Eni Enrico Mattei.
  3. Rantakari, Heikki, 2014. "A simple model of project selection with strategic communication and uncertain motives," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 102(C), pages 14-42.
  4. Salvatore Piccolo, 2011. "Communicating Vertical Hierarchies: the Adverse Selection Case," CSEF Working Papers, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy 273, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  5. Daron Acemoglu & Asuman Ozdaglar, 2011. "Opinion Dynamics and Learning in Social Networks," Dynamic Games and Applications, Springer, Springer, vol. 1(1), pages 3-49, March.
  6. Sergio Currarini & Francesco Feri, 2013. "Information Sharing Networks in Linear Quadratic Games," Working Papers, Fondazione Eni Enrico Mattei 2013.47, Fondazione Eni Enrico Mattei.
  7. Edoardo Gallo, 2014. "Communication networks in markets," Cambridge Working Papers in Economics, Faculty of Economics, University of Cambridge 1431, Faculty of Economics, University of Cambridge.
  8. Andrea Galeotti & Christian Ghiglino & Francesco Squintani, 2009. "Strategic Information Transmission in Networks," Economics Discussion Papers, University of Essex, Department of Economics 668, University of Essex, Department of Economics.
  9. Syngjoo Choi & Jihong Lee, 2014. "Communication, Coordination, And Networks," Journal of the European Economic Association, European Economic Association, European Economic Association, vol. 12(1), pages 223-247, 02.
  10. Lai, Ernest K., 2014. "Expert advice for amateurs," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 103(C), pages 1-16.
  11. Wang, Yun, 2013. "The result of world powers in WTO: A cheap-talk game under different communication protocols," China Economic Review, Elsevier, Elsevier, vol. 27(C), pages 192-207.
  12. Garcia, Daniel, 2012. "Communication and Information Acquisition in Networks," MPRA Paper 55481, University Library of Munich, Germany, revised 24 Apr 2014.
  13. Acemoglu, Daron & Ozdaglar, Asuman & ParandehGheibi, Ali, 2010. "Spread of (mis)information in social networks," Games and Economic Behavior, Elsevier, Elsevier, vol. 70(2), pages 194-227, November.
  14. Prat, Andrea & de Martí, Joan & Calvó-Armengol, Antoni, 0. "Communication and influence," Theoretical Economics, Econometric Society, Econometric Society.
  15. McGee, Andrew & Yang, Huanxing, 2013. "Cheap talk with two senders and complementary information," Games and Economic Behavior, Elsevier, Elsevier, vol. 79(C), pages 181-191.
  16. Salvatore Piccolo & Emanuele Tarantino, 2011. "Managerial Compensations and Information Sharing under Moral Hazard: Is Transparency Good?," CSEF Working Papers, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy 294, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  17. Maria Goltsman & Gregory Pavlov, 2008. "How to Talk to Multiple Audiences," UWO Department of Economics Working Papers, University of Western Ontario, Department of Economics 20081, University of Western Ontario, Department of Economics.
  18. Jeanne Hagenbach & Frédéric Koessler, 2011. "Full Disclosure in Decentralized Organizations," PSE Working Papers halshs-00652279, HAL.

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