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Toxic types and infectious communication breakdown

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Abstract

We introduce a new channel for breakdown of cheap talk communication between an informed sender and an uninformed receiver. Our framework has the following novel feature: conditional on interacting, both parties agree on the optimal action in each state, but there are sender types with which the receiver prefers not to interact. We show that for a broad class of preferences, any interval equilibrium induces only finitely many actions in the support of the receiver's strategy. We also show that introducing a second stage with noisy signals on the sender type has a dramatic effect on the firststage communication.

Suggested Citation

  • Kfir Eliaz & Alexander Frug, 2020. "Toxic types and infectious communication breakdown," Economics Working Papers 1759, Department of Economics and Business, Universitat Pompeu Fabra.
    • Handle: RePEc:upf:upfgen:1759
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    More about this item

    Keywords

    Cheap talk; contagion;

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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