Non-Fully Strategic Information Transmission
AbstractBuilding on Crawford and Sobel's (1982) general communication model, this paper introduces the possibility that players are non-strategic. The sender might be honest, truthfully reporting private information, or the receiver might be naive, blindly implementing the sender's recommendations . In contrast to the predictions of the fully-strategic model, we show that equilibrium communication is inflated but detailed, and that the equilibrium outcome is biased in an ex-ante sense. Our findings are relevant to understanding communication by financial analysts and academic evaluators.
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Bibliographic InfoPaper provided by University of Rochester - Wallis Institute of Political Economy in its series Wallis Working Papers with number WP29.
Date of creation: Oct 2002
Date of revision:
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Postal: University of Rochester, Wallis Institute, Harkness 109B Rochester, New York 14627 U.S.A.
communication; bounded rationality; financial advice; grade inflation;
Find related papers by JEL classification:
- C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-11-18 (All new papers)
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