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Cheap Talk and Burned Money

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  • David Austen-Smith
  • Jeffrey S. Banks

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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Bibliographic Info

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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Postal: Center for Mathematical Studies in Economics and Management Science, Northwestern University, 580 Jacobs Center, 2001 Sheridan Road, Evanston, IL 60208-2014
Phone: 847/491-3527
Fax: 847/491-2530
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Web page: http://www.kellogg.northwestern.edu/research/math/
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  1. Joseph Farrell and Robert Gibbons., 1988. "Cheap Talk Can Matter in Bargaining," Economics Working Papers 8863, University of California at Berkeley.
  2. 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.
  3. Rabin, Matthew, 1990. "Communication between rational agents," Journal of Economic Theory, Elsevier, vol. 51(1), pages 144-170, June.
  4. Damme, E.E.C. van, 1989. "Stable equilibria and forward induction," Open Access publications from Tilburg University urn:nbn:nl:ui:12-154422, Tilburg University.
  5. Farrell, J. & Gibbons, R., 1989. "Cheap Talk With Two Audiences," Working papers 518, Massachusetts Institute of Technology (MIT), Department of Economics.
  6. Blume, A. & Kim, Y.G. & Sobel, J., 1993. "Evolutionary Stability in Games of Communication," Working Papers 93-07, University of Iowa, Department of Economics.
  7. 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.
  8. 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.
  9. Blume, A., 1991. "Equilibrium Refinement in Sender-Receiver Games," Working Papers 91-28, University of Iowa, Department of Economics.
  10. Farrell, J. & Gibbons, R., 1989. "Cheap Talk With Two Audiences," Working Papers e-89-7, Hoover Institution, Stanford University.
  11. Farrell Joseph, 1993. "Meaning and Credibility in Cheap-Talk Games," Games and Economic Behavior, Elsevier, vol. 5(4), pages 514-531, October.
  12. Gilligan, Thomas W & Krehbiel, Keith, 1987. "Collective Decisionmaking and Standing Committees: An Informational Rationale for Restrictive Amendment Procedures," Journal of Law, Economics and Organization, Oxford University Press, vol. 3(2), pages 287-335, Fall.
  13. van Damme,Eric, 1987. "Stable equilibria and forward induction," Discussion Paper Serie A 128, University of Bonn, Germany.
  14. V. Crawford & J. Sobel, 2010. "Strategic Information Transmission," Levine's Working Paper Archive 544, David K. Levine.
  15. Joseph E. Harrington, 1992. "The Revelation Of Information Through The Electoral Process: An Exploratory Analysis," Economics and Politics, Wiley Blackwell, vol. 4(3), pages 255-276, November.
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