Communication, Risk and Efficiency in Games

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Communication, Risk and Efficiency in Games

Author Info

Andreas Blume (Department of Economics, University of Iowa, Iowa City, IA 52242)

Abstract

This paper looks at simple games with one round of pre-play communication followed by a simultaneous move, complete information game. In these games the {\em curb} concept distinguishes among efficient equilibria according to their risk. The paper contains two major results. First, if only one of the players can talk, and that player's favorite outcome is a strict equilibrium in the underlying game, then, for a given size of the message space the corresponding payoffs will be the only curb equilibrium payoffs in the communication game, provided the communicating player's risk at that equilibrium is sufficiently low. Second, suppose that communicating players have a slight preference for strategies where messages communicate only their intent to play according to their preferred equilibrium. Then the curb concept distinguishes multi-sided from one-sided communication. Modifying payoffs in this way does not affect the results with one-sided communication. However with two-sided communication, and a unique strict common interest equilibrium in the underlying game, only the payoffs of that equilibrium are curb equilibrium payoffs in the communication game.

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Paper provided by EconWPA in its series Game Theory and Information with number 9312002.

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Length: 25 pages
Date of creation: 06 Dec 1993
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Handle: RePEc:wpa:wuwpga:9312002

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Find related papers by JEL classification:
C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
D8 - Microeconomics - - Information, Knowledge, and Uncertainty

References listed on IDEAS
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Basu, Kaushik & Weibull, Jorgen W., 1991. "Strategy subsets closed under rational behavior," Economics Letters, Elsevier, vol. 36(2), pages 141-146, June. [Downloadable!] (restricted)
Other versions:
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Other versions:
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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)
Other versions:
- Blume, A. & Kim, Y.G. & Sobel, J., 1992. "Evolutionary Stability in Games of Communication," Working Papers 92-17, University of Iowa, Department of Economics.
- Andreas Blume & Yong-Gwan Kim & Joel Sobel, 1992. "Evolutionary Stability in Games of Communication," University of California at San Diego, Economics Working Paper Series 92-29, Department of Economics, UC San Diego.
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Other versions:
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Kim, Y.G. & Sobel, J., 1993. "An Evolutionary Approach to Pre-Play Communication," Working Papers 93-02, University of Iowa, Department of Economics.
Other versions:
- Yong Gwan Kim & Joel Sobel, 1992. "An Evolutionary Approach to Pre-Play Communication," University of California at San Diego, Economics Working Paper Series 92-01, Department of Economics, UC San Diego.
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Hurkens, S., 1993. "Multi-Sided Pre-Play Communication By Burning Money," Papers 9319, Tilburg - Center for Economic Research.
Other versions:
- Hurkens, Sjaak, 1996. "Multi-sided Pre-play Communication by Burning Money," Journal of Economic Theory, Elsevier, vol. 69(1), pages 186-197, April. [Downloadable!] (restricted)

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