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Competitive cheap talk

Author

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  • Li, Zhuozheng
  • Rantakari, Heikki
  • Yang, Huanxing

Abstract

We study a competitive cheap talk model with two senders. Each sender is responsible for a single project and observes its return. Exactly one project will be implemented. Both senders share some common interests with the principal, but have own-project biases. Under simultaneous communication, all equilibria are shown to be partition equilibria, but all the equilibria can no longer be ranked ex ante in terms of Pareto efficiency. The payoff of the principal depends on both the total conflict between the agents and the asymmetry in the own-project biases. In the equilibrium preferred by the principal, the agent with a smaller bias always has veto power to determine which alternative is implemented and weakly more messages. In any given equilibrium, decreasing the own-project bias of one agent improves the precision of communication by both agents. Finally, sequential communication and simple delegation are shown to be essentially outcome-equivalent to simultaneous communication.

Suggested Citation

  • Li, Zhuozheng & Rantakari, Heikki & Yang, Huanxing, 2016. "Competitive cheap talk," Games and Economic Behavior, Elsevier, vol. 96(C), pages 65-89.
  • Handle: RePEc:eee:gamebe:v:96:y:2016:i:c:p:65-89
    DOI: 10.1016/j.geb.2016.01.010
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Eliaz, Kfir & Oren-Kolbinger, Orli & Weisburd, Sarit, 2017. "Limited Attention, Salience and Changing Prices: Evidence from a Field Experiment in Online Supermarket Shopping," CEPR Discussion Papers 12014, C.E.P.R. Discussion Papers.
    2. repec:eee:jeborg:v:158:y:2019:i:c:p:255-268 is not listed on IDEAS
    3. Schmidbauer, Eric, 2017. "Multi-period competitive cheap talk with highly biased experts," Games and Economic Behavior, Elsevier, vol. 102(C), pages 240-254.
    4. Eric Schmidbauer, 2016. "Multi-period competitive cheap talk with very biased experts," Working Papers 2016-04, University of Central Florida, Department of Economics.

    More about this item

    Keywords

    Cheap talk; Multiple senders; Competition;

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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