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Cheap Talk and Reputation in Repeated Pretrial Negotiation

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  • Jeong-Yoo Kim

Abstract

Infinitely repeated interaction between a defendant and a plaintiff can enhance the credibility of cheap talk and improve efficiency in outcomes that would be feasible without cheap talk. The basic driving force is reputation effect. If t he players are concerned about their reputation, cheap talk cannot be taken as meaningless even in a game where the interests of the players are sufficiently conflicting, because possible current gains from opportunistic behavior can be wiped out by future losses in payoff from damaged.

Suggested Citation

  • Jeong-Yoo Kim, 1996. "Cheap Talk and Reputation in Repeated Pretrial Negotiation," RAND Journal of Economics, The RAND Corporation, vol. 27(4), pages 787-802, Winter.
  • Handle: RePEc:rje:randje:v:27:y:1996:i:winter:p:787-802
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    Citations

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    Cited by:

    1. Jung, Hanjoon Michael, 2008. "Paradox of Credibility," MPRA Paper 7443, University Library of Munich, Germany.
    2. Jérôme Hergueux & Nicolas Jacquemet & Stéphane Luchini & Jason Shogren, 2016. "Leveraging the Honor Code: Public Goods Contributions under Oath," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01379060, HAL.
    3. Li, Ming & Tymofiy Mylovanov, 2009. "Credibility for Sale: the Effect of Disclosure on Information Acquisition and Transmission," Working Papers 09008, Concordia University, Department of Economics, revised Oct 2009.
    4. Kim Jeong-Yoo & Jun Tackseung, 2008. "Connectivity and Allocation Rule in a Directed Network," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 8(1), pages 1-21, September.
    5. Olivier Bonroy & Alexis Garapin & Daniel Llerena, 2017. "Changing partners in a cheap talk game: Experimental evidence," International Journal of Economic Theory, The International Society for Economic Theory, vol. 13(2), pages 197-216, June.
    6. Schmidbauer, Eric, 2017. "Multi-period competitive cheap talk with highly biased experts," Games and Economic Behavior, Elsevier, vol. 102(C), pages 240-254.
    7. Alok R. Saboo & Rajdeep Grewal, 2013. "Stock Market Reactions to Customer and Competitor Orientations: The Case of Initial Public Offerings," Marketing Science, INFORMS, vol. 32(1), pages 70-88, October.
    8. Croson, Rachel & Boles, Terry & Murnighan, J. Keith, 2003. "Cheap talk in bargaining experiments: lying and threats in ultimatum games," Journal of Economic Behavior & Organization, Elsevier, vol. 51(2), pages 143-159, June.
    9. James Matthew Moore, 2013. "TSX Stock Repurchase Announcements and the Impact of TSX Disclosure Requirements," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 4(2), pages 19-32, April.
    10. In-Uck Park, 2000. "Cheap Talk Reputation and Coordination of Differentiated Experts," Econometric Society World Congress 2000 Contributed Papers 1680, Econometric Society.
    11. Hanjoon Michael Jung, 2008. "Paradox of Credibility," Microeconomics Working Papers 22267, East Asian Bureau of Economic Research.
    12. Yoris A. Au & Kim Huat Goh & Robert J. Kauffman & Frederick J. Riggins, 2007. "Planning Technology Investments For High Payoffs: A Rational Expectations Approach To Gauging Potential And Realized Value In A Changing Environment," Working Papers 0014, College of Business, University of Texas at San Antonio.
    13. Eric Schmidbauer, 2016. "Multi-period competitive cheap talk with very biased experts," Working Papers 2016-04, University of Central Florida, Department of Economics.

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