IDEAS home Printed from https://ideas.repec.org/a/eee/mateco/v122y2026ics0304406825001211.html

Dynamic communication with trading commissions

Author

Listed:
  • Singh, Hargungeet

Abstract

This paper studies a dynamic cheap-talk communication game to investigate the role of trading commissions in broker–investor relationships. An investor’s optimal portfolio mix is fixed and privately known to a broker. The stochastic evolution of the portfolio-mix can be adjusted by the investor at a fixed cost paid to the broker. I consider two cases — whether the broker (sender) can or cannot send uninformative messages to the investor (receiver). In the Markov-Perfect Equilibria, the portfolio mix has an informational value to the investor because it influences the broker’s incentives for truth-telling. The presence of uninformative messages further restricts the set of such ‘truth-telling’ portfolio-mix-values. As the investor’s payoff from being informed becomes very large, and the sender is able to send uninformative messages, the only pure-strategy equilibrium involves no informative communication, and any informative equilibrium involves delays in communication. I also study an extension with proportional adjustment costs.

Suggested Citation

  • Singh, Hargungeet, 2026. "Dynamic communication with trading commissions," Journal of Mathematical Economics, Elsevier, vol. 122(C).
    • Handle: RePEc:eee:mateco:v:122:y:2026:i:c:s0304406825001211
    DOI: 10.1016/j.jmateco.2025.103204
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0304406825001211
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jmateco.2025.103204?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:mateco:v:122:y:2026:i:c:s0304406825001211. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jmateco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.