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Communication, Risk and Efficiency in Games

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  • Andreas Blume

    (Univ. of Iowa)

Abstract

This paper studies the evolution of effective pre-play communication in games where a single communication round precedes a simultaneous-move, complete-information game. The paper identifies stable outcomes under population learning dynamics in which individuals with some probability replace their current strategy with a best reply against beliefs supported on a sample of currently used strategies. It is shown that under these conditions the effectiveness of one-sided pre-play communication is inversely related to risk in the underlying game, and to the size of the message space. Multi-sided communication can be shown to be more effective than one-sided communication; i.e., risk and the size of the message space play no role. This requires that all players communicate, have the same preferred equilibrium and messages have some small a priori information content that identifies message profiles that signal agreement on a strict equilibrium in the underlying game.

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Bibliographic Info

Paper provided by EconWPA in its series Game Theory and Information with number 9604001.

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Length: 39 pages
Date of creation: 18 Apr 1996
Date of revision:
Handle: RePEc:wpa:wuwpga:9604001

Note: Zipped using PKZIP v2.04, encoded using UUENCODE v5.15. Zipped file includes 1 file -- ui9603.wpa (Latex, 39 pages);
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  1. Farrell, Joseph, 1988. "Communication, coordination and Nash equilibrium," Economics Letters, Elsevier, vol. 27(3), pages 209-214.
  2. Basu, K. & Weibull, J.W., 1990. "Strategy Subsets Closed Under Rational Behaviour," Papers 479, Stockholm - International Economic Studies.
  3. Gilboa, Itzhak & Matsui, Akihiko, 1991. "Social Stability and Equilibrium," Econometrica, Econometric Society, vol. 59(3), pages 859-67, May.
  4. Kim, Y.G. & Sobel, J., 1993. "An Evolutionary Approach to Pre-Play Communication," Working Papers 93-02, University of Iowa, Department of Economics.
  5. Hurkens Sjaak, 1995. "Learning by Forgetful Players," Games and Economic Behavior, Elsevier, vol. 11(2), pages 304-329, November.
  6. Hurkens, S., 1993. "Multi-Sided Pre-Play Communication By Burning Money," Papers 9319, Tilburg - Center for Economic Research.
  7. Warneryd, Karl, 1991. "Evolutionary stability in unanimity games with cheap talk," Economics Letters, Elsevier, vol. 36(4), pages 375-378, August.
  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.
  9. M. Kandori & G. Mailath & R. Rob, 1999. "Learning, Mutation and Long Run Equilibria in Games," Levine's Working Paper Archive 500, David K. Levine.
  10. Carlsson, Hans & van Damme, Eric, 1993. "Global Games and Equilibrium Selection," Econometrica, Econometric Society, vol. 61(5), pages 989-1018, September.
  11. Ritzberger, Klaus & Weibull, Jorgen W, 1995. "Evolutionary Selection in Normal-Form Games," Econometrica, Econometric Society, vol. 63(6), pages 1371-99, November.
  12. Bhaskar, V., 1998. "Noisy Communication and the Evolution of Cooperation," Journal of Economic Theory, Elsevier, vol. 82(1), pages 110-131, September.
  13. Ehud Kalai & Dov Samet, 1982. "Persistent Equilibria in Strategic Games," Discussion Papers 515, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  14. Glen Ellison, 2010. "Learning, Local Interaction, and Coordination," Levine's Working Paper Archive 391, David K. Levine.
  15. Hurkens, S., 1993. "Multi-sided Pre-play Communication by Burning Money," Discussion Paper 1993-19, Tilburg University, Center for Economic Research.
  16. Cooper, Russell, et al, 1992. "Communication in Coordination Games," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 739-71, May.
  17. Swinkels, J., 1991. "Evolutionary Stability with Equilibrium Entrants," Papers 9, Stanford - Institute for Thoretical Economics.
  18. John C. Harsanyi & Reinhard Selten, 1988. "A General Theory of Equilibrium Selection in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582384.
  19. Ritzberger, Klaus & Weibull, J├Ârgen W., 1993. "Evolutionary Selection in Normal Form Games," Working Paper Series 383, Research Institute of Industrial Economics.
  20. Akihiko Matsui, 1989. "Cheap Talk and Cooperation in the Society," Discussion Papers 848, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  21. COOPER, R. & DEJONG, D.V. & FORSYTHE, R. & Tom Ross, 1989. "Communication In Coordination Games," Carleton Industrial Organization Research Unit (CIORU) 89-07, Carleton University, Department of Economics.
  22. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
  23. Joseph Farrell & Matthew Rabin, 1996. "Cheap Talk," Journal of Economic Perspectives, American Economic Association, vol. 10(3), pages 103-118, Summer.
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