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When words are not enough

Author

Listed:
  • Bijkerk, Suzanne H.
  • Karamychev, Vladimir
  • Swank, Otto H.

Abstract

Communication through ordinary talk is very common. Often, the receiver of information has the option to investigate a sender’s type. We extend a standard cheap-talk model by giving the receiver this option. We show that when the receiver bears most of the investigation cost, the option to investigate drives away most cheap-talk communication. When the sender pays a substantial part of the investigation cost, the option to investigate disciplines the sender. Introducing an investigation device to a cheap-talk model demonstrates the vulnerability of cheap talk on the one hand, and shows how communication can be improved on the other.

Suggested Citation

  • Bijkerk, Suzanne H. & Karamychev, Vladimir & Swank, Otto H., 2018. "When words are not enough," Journal of Economic Behavior & Organization, Elsevier, vol. 149(C), pages 294-314.
  • Handle: RePEc:eee:jeborg:v:149:y:2018:i:c:p:294-314
    DOI: 10.1016/j.jebo.2018.03.009
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Cheap talk; Costly state verification;

    JEL classification:

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

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