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Cheap Talk and Burned Money

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Author Info
David Austen-Smith
Jeffrey S. Banks

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Abstract

We augment the standard Crawford-Sobel (Econometrica 1982) model of cheap talk communication by allowing the informed party to use both costless and costly messages. The issues on which we focus are the consequences for cheap talk signaling of the option to use a costly signal ("burned money"); the circumstances under which both cheap talk and burned money are used to signal information; and the extent to which burning money is the preferred instrument for information transmission.

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File URL: http://www.kellogg.northwestern.edu/research/math/papers/1245.pdf
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Paper provided by Northwestern University, Center for Mathematical Studies in Economics and Management Science in its series Discussion Papers with number 1245.

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Date of creation: Nov 1998
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Handle: RePEc:nwu:cmsems:1245

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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. Matthews, Steven A, 1989. "Veto Threats: Rhetoric in a Bargaining Game," The Quarterly Journal of Economics, MIT Press, vol. 104(2), pages 347-69, May. [Downloadable!] (restricted)
  2. Rabin, Matthew, 1990. "Communication between rational agents," Journal of Economic Theory, Elsevier, vol. 51(1), pages 144-170, June. [Downloadable!] (restricted)
  3. van Damme, Eric, 1989. "Stable equilibria and forward induction," Journal of Economic Theory, Elsevier, vol. 48(2), pages 476-496, August. [Downloadable!] (restricted)
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  4. Farrell, Joseph & Gibbons, Robert, 1989. "Cheap Talk with Two Audiences," American Economic Review, American Economic Association, vol. 79(5), pages 1214-23, December. [Downloadable!] (restricted)
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  5. Farrell, Joseph & Gibbons, Robert, 1989. "Cheap talk can matter in bargaining," Journal of Economic Theory, Elsevier, vol. 48(1), pages 221-237, June. [Downloadable!] (restricted)
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  6. Blume Andreas, 1994. "Equilibrium Refinements in Sender-Receiver Games," Journal of Economic Theory, Elsevier, vol. 64(1), pages 66-77, October. [Downloadable!] (restricted)
  7. Matthews, Steven A. & Okuno-Fujiwara, Masahiro & Postlewaite, Andrew, 1991. "Refining cheap-talk equilibria," Journal of Economic Theory, Elsevier, vol. 55(2), pages 247-273, December. [Downloadable!] (restricted)
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    • Steven A. Matthews & M. Okuno-Fujiwara & Andrew Postlewaite, 1990. "Refining Cheap-Talk Equilibria," Discussion Papers 892R, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
  8. Blume Andreas & Kim Yong-Gwan & Sobel Joel, 1993. "Evolutionary Stability in Games of Communication," Games and Economic Behavior, Elsevier, vol. 5(4), pages 547-575, October. [Downloadable!] (restricted)
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  9. Crawford, Vincent P & Sobel, Joel, 1982. "Strategic Information Transmission," Econometrica, Econometric Society, vol. 50(6), pages 1431-51, November. [Downloadable!] (restricted)
  10. Farrell Joseph, 1993. "Meaning and Credibility in Cheap-Talk Games," Games and Economic Behavior, Elsevier, vol. 5(4), pages 514-531, October. [Downloadable!] (restricted)
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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. [Downloadable!] (restricted)
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Cited by:
(explanations, 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. Stephen Morris, 1998. "An Instrumental Theory of Political Correctness," Discussion Papers 1209, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
  2. Andriy Zapechelnyuk & Ro'i Zultan, 2008. "Job Market Signalling and Job Search," Levine's Bibliography 122247000000002301, UCLA Department of Economics. [Downloadable!]
    Other versions:
  3. Reuben E., 2002. "Interest groups and politics: The need to concentrate on group formation," Public Economics 0212001, EconWPA. [Downloadable!]
  4. Péter Eső & James Schummer, 2009. "Credible deviations from signaling equilibria," International Journal of Game Theory, Springer, vol. 38(3), pages 411-430, November. [Downloadable!] (restricted)
  5. Andreas Blume, 1995. "Information Transmission and Preference Similarity," Game Theory and Information 9504002, EconWPA, revised 29 May 1996. [Downloadable!]
  6. B. Douglas Bernheim & Sergei Severinov, 2000. "Bequests as Signals: An Explanation for the Equal Division Puzzle," NBER Working Papers 7791, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  7. Andriy Zapechelnyuk & Ro'i Zultan, 2008. "Altruism, Partner Choice, and Fixed-Cost Signalling," Levine's Bibliography 122247000000002199, UCLA Department of Economics. [Downloadable!]
    Other versions:
  8. Peter Eso & James Schummer, 2005. "Robust Deviations from Signaling Equilibria," Discussion Papers 1406, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
  9. F. Barigozzi & B. Villeneuve, 2001. "Influencing the Misinformed Misbehaver: An Analysis of Public Policy towards Uncertainty and External Effects," Working Papers 404, Dipartimento Scienze Economiche, Universita' di Bologna. [Downloadable!]
  10. José Martí Pellón & Marina Balboa, 2003. "Characterisation Of The Reputation Of Private Equity Managers: Evidence In Spain," Working Papers. Serie EC 2003-16, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
  11. Andreas Blume, 1996. "Information Transmission and Preference Similarity," Game Theory and Information 9605004, EconWPA. [Downloadable!]
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