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Hierarchical cheap talk

  • Ambrus, Attila

    ()

    (Department of Economics, Harvard University)

  • Azevedo, Eduardo M.

    ()

    (Department of Economics, Harvard University)

  • Kamada, Yuichiro

    ()

    (Department of Economics, Harvard University)

We investigate situations in which agents can communicate to each other only through a chain of intermediators, for example because they have to obey institutionalized communication protocols. We assume that all involved in the communication are strategic, and might want to influence the action taken by the final receiver. The set of pure strategy equilibrium outcomes is simple to characterize, monotonic in each intermediator's bias, does not depend on the order of intermediators, and intermediation in these equilibria cannot improve information transmission. However, none of these conclusions hold for mixed equilibria. We provide a partial characterization of mixed equilibria, and offer an economically relevant sufficient condition for every equilibrium to be outcome-equivalent to a pure equilibrium and hence the simple characterization and comparative statics results to hold for the set of all equilibria.

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Article provided by Econometric Society in its journal Theoretical Economics.

Volume (Year): 8 (2013)
Issue (Month): 1 (January)
Pages:

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Handle: RePEc:the:publsh:1038
Contact details of provider: Web page: http://econtheory.org

References listed on IDEAS
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  1. Àlex Arenas & Antonio Cabrales & Albert Díaz-Guilera & Roger Guimerà & Fernando Vega, 2003. "Optimal information transmission in organizations: Search and congestion," Economics Working Papers 698, Department of Economics and Business, Universitat Pompeu Fabra.
  2. Ambrus, Attila & Takahashi, Satoru, 2008. "Multi-sender cheap talk with restricted state spaces," Theoretical Economics, Econometric Society, vol. 3(1), March.
  3. Robert J. Aumann & Sergiu Hart, 2002. "Long Cheap Talk," Discussion Paper Series dp284, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem, revised Nov 2002.
  4. Andrea Galeotti & Christian Ghiglino & Francesco Squintani, 2009. "Strategic Information Transmission in Networks," Economics Discussion Papers 668, University of Essex, Department of Economics.
  5. Ivanov, Maxim, 2010. "Informational control and organizational design," Journal of Economic Theory, Elsevier, vol. 145(2), pages 721-751, March.
  6. Jacques Crémer & Luis Garicano & Andrea Prat, 2007. "Language and the Theory of the Firm," The Quarterly Journal of Economics, MIT Press, vol. 122(1), pages 373-407, 02.
  7. Ambrus, Attila & Azevedo, Eduardo M. & Kamada, Yuichiro & Takagi, Yuki, 2013. "Legislative committees as information intermediaries: A unified theory of committee selection and amendment rules," Journal of Economic Behavior & Organization, Elsevier, vol. 94(C), pages 103-115.
  8. Ivanov, Maxim, 2010. "Communication via a strategic mediator," Journal of Economic Theory, Elsevier, vol. 145(2), pages 869-884, March.
  9. Visser, Bauke, 2000. "Organizational communication structure and performance," Journal of Economic Behavior & Organization, Elsevier, vol. 42(2), pages 231-252, June.
  10. Luis Garicano, 2000. "Hierarchies and the Organization of Knowledge in Production," Journal of Political Economy, University of Chicago Press, vol. 108(5), pages 874-904, October.
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