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Unmediated communication in games with complete and incomplete information

  • Gerardi, Dino

In this paper we study the effects of adding unmediated communication to static, finite games of complete and incomplete information. We characterize S^{U}(G), the set of outcomes of a game G, that are induced by sequential equilibria of cheap talk extensions. A cheap talk extension of G is an extensive-form game in which players communicate before playing G. A reliable mediator is not available and players exchange private or public messages that do not affect directly their payoffs. We first show that if G is a game of complete information with five or more players and rational parameters, then S^{U}(G) coincides with the set of correlated equilibria of G. Next, we demonstrate that if G is a game of incomplete information with at least five players, rational parameters and full support (i.e. all profiles of types have positive probability), then S^{U}(G) is equal to the set of communication equilibria of G.

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Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 114 (2004)
Issue (Month): 1 (January)
Pages: 104-131

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Handle: RePEc:eee:jetheo:v:114:y:2004:i:1:p:104-131
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622869

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  1. V. Crawford & J. Sobel, 2010. "Strategic Information Transmission," Levine's Working Paper Archive 544, David K. Levine.
  2. Matthews, Steven A. & Postlewaite, Andrew, 1989. "Pre-play communication in two-person sealed-bid double auctions," Journal of Economic Theory, Elsevier, vol. 48(1), pages 238-263, June.
  3. F. Forges, 2010. "An Approach to Communication Equilibrium," Levine's Working Paper Archive 516, David K. Levine.
  4. Ben-Porath, Elchanan, 2003. "Cheap talk in games with incomplete information," Journal of Economic Theory, Elsevier, vol. 108(1), pages 45-71, January.
  5. Gerardi, Dino, 2004. "Unmediated communication in games with complete and incomplete information," Journal of Economic Theory, Elsevier, vol. 114(1), pages 104-131, January.
  6. Kreps, David M & Wilson, Robert, 1982. "Sequential Equilibria," Econometrica, Econometric Society, vol. 50(4), pages 863-94, July.
  7. Roger B. Myerson, 1984. "Multistage Games with Communication," Discussion Papers 590, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  8. Dhillon, Amrita & Mertens, Jean Francois, 1996. "Perfect Correlated Equilibria," Journal of Economic Theory, Elsevier, vol. 68(2), pages 279-302, February.
  9. Aumann, Robert J., 1974. "Subjectivity and correlation in randomized strategies," Journal of Mathematical Economics, Elsevier, vol. 1(1), pages 67-96, March.
  10. Ehud Lehrer & Sylvain Sorin, 1994. "One-Shot Public Mediated Talk," Discussion Papers 1108, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  11. Forges, F., 1987. "Universal mechanisms," CORE Discussion Papers 1987004, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  12. Manelli, Alejandro M, 1996. "Cheap Talk and Sequential Equilibria in Signaling Games," Econometrica, Econometric Society, vol. 64(4), pages 917-42, July.
  13. Myerson, Roger B., 1982. "Optimal coordination mechanisms in generalized principal-agent problems," Journal of Mathematical Economics, Elsevier, vol. 10(1), pages 67-81, June.
  14. Amparo Urbano & Jose E. Vila, 2002. "Computational Complexity and Communication: Coordination in Two-Player Games," Econometrica, Econometric Society, vol. 70(5), pages 1893-1927, September.
  15. Banks, Jeffrey S. & Calvert, Randall L., 1992. "A battle-of-the-sexes game with incomplete information," Games and Economic Behavior, Elsevier, vol. 4(3), pages 347-372, July.
  16. Lehrer, Ehud, 1996. "Mediated Talk," International Journal of Game Theory, Springer;Game Theory Society, vol. 25(2), pages 177-88.
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