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Strategic Transmission of Correlated Information

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  • Sergio Currarini
  • Giovanni Ursino
  • A K S Chand

Abstract

We consider a situation in which a decision-maker gathers information from imperfectly informed experts, receiving coarse signals about a uniform state of the world. Private information is (conditionally) correlated across players, and communication is cheap talk. We show that with two experts correlation unambiguously tightens the conditions on preferences for a truth-telling equilibrium. However, with multiple experts the effect of correlation on the incentives to report information truthfully can be non-monotonic: while little and large levels of correlation hinder truth-telling, intermediate levels may discipline experts’ equilibrium behaviour and foster truthful communication. We discuss the implications of our results for the political discussion in the presence of ‘selective exposure' to media, where similarity in preferences comes with higher correlation, and a trade-off between truth-telling incentives and informational content arises.

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  • Sergio Currarini & Giovanni Ursino & A K S Chand, 2020. "Strategic Transmission of Correlated Information," The Economic Journal, Royal Economic Society, vol. 130(631), pages 2175-2206.
    • Handle: RePEc:oup:econjl:v:130:y:2020:i:631:p:2175-2206.
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    File URL: http://hdl.handle.net/10.1093/ej/ueaa039
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    Cited by:

    1. Ay, Jean-Sauveur & Le Gallo, Julie, 2021. "The Signaling Values of Nested Wine Names," Working Papers 321851, American Association of Wine Economists.
    2. Migrow, Dimitri, 2021. "Designing communication hierarchies," Journal of Economic Theory, Elsevier, vol. 198(C).

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