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Dynamic Information Revelation in Cheap Talk

Author

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  • Ivanov Maxim

    (Department of Economics, McMaster University, Kenneth Taylor Hall, 1280 Main Street West, Hamilton, ON, Canada L8S 4M4)

Abstract

This paper studies a multi-stage version of Crawford and Sobel’s communication game. In every period the receiver determines a test about the unknown state whose result is privately observed by the sender. After the sender sends a costless message about an outcome of the test, the receiver selects a test in the next period. After a finite number of periods of interaction, the receiver makes a decision. The paper offers a sequence of tests that refine sender’s information step-by-step and preserve truthtelling in every period. This sequence allows the receiver to learn the state in a subinterval of the state space with an arbitrary precision and has appealing theoretical properties. It consists of simple binary tests which reveal whether the state is above a certain cutoff, where the cutoffs are monotonic across periods and independent from results of the previous tests. Finally, we show that the relative payoff efficiency of multi-stage interaction compared to a single-stage game increases without a bound as the bias in preferences tends to zero.

Suggested Citation

  • Ivanov Maxim, 2015. "Dynamic Information Revelation in Cheap Talk," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 15(2), pages 251-275, July.
    • Handle: RePEc:bpj:bejtec:v:15:y:2015:i:2:p:251-275:n:6
    DOI: 10.1515/bejte-2014-0017
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    References listed on IDEAS

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    1. Ivanov, Maxim, 2010. "Informational control and organizational design," Journal of Economic Theory, Elsevier, vol. 145(2), pages 721-751, March.
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    Cited by:

    1. Frug, Alexander, 2018. "Strategic gradual learning and information transmission," Journal of Economic Theory, Elsevier, vol. 177(C), pages 594-615.
    2. Hitoshi Sadakane, 2017. "Multistage Information Transmission with Voluntary Monetary Transfer," ISER Discussion Paper 1006r, Institute of Social and Economic Research, Osaka University, revised Jun 2018.
    3. Ichihashi, Shota, 2019. "Limiting Sender's information in Bayesian persuasion," Games and Economic Behavior, Elsevier, vol. 117(C), pages 276-288.
    4. Ayça Özdoðan, 2016. "A Survey of Strategic Communication and Persuasion," Bogazici Journal, Review of Social, Economic and Administrative Studies, Bogazici University, Department of Economics, vol. 30(1), pages 1-21.
    5. Hitoshi Sadakane, 2017. "Multistage Information Transmission with Voluntary Monetary Transfer," ISER Discussion Paper 1006rr, Institute of Social and Economic Research, Osaka University, revised Jan 2018.
    6. Hitoshi Sadakane, 2017. "Multistage Information Transmission with Voluntary Monetary Transfer," ISER Discussion Paper 1006, Institute of Social and Economic Research, Osaka University.
    7. Farzaneh Farhadi & Demosthenis Teneketzis, 2022. "Dynamic Information Design: A Simple Problem on Optimal Sequential Information Disclosure," Dynamic Games and Applications, Springer, vol. 12(2), pages 443-484, June.
    8. Ivanov, Maxim & Sam, Alex, 2022. "Cheap talk with private signal structures," Games and Economic Behavior, Elsevier, vol. 132(C), pages 288-304.

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