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Hierarchical cheap talk

Author

Listed:
  • Ambrus, Attila

    () (Department of Economics, Harvard University)

  • Azevedo, Eduardo M.

    () (Department of Economics, Harvard University)

  • Kamada, Yuichiro

    () (Department of Economics, Harvard University)

Abstract

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.

Suggested Citation

  • Ambrus, Attila & Azevedo, Eduardo M. & Kamada, Yuichiro, 2013. "Hierarchical cheap talk," Theoretical Economics, Econometric Society, vol. 8(1), January.
  • Handle: RePEc:the:publsh:1038
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    References listed on IDEAS

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    1. Jacques Crémer & Luis Garicano & Andrea Prat, 2007. "Language and the Theory of the Firm," The Quarterly Journal of Economics, Oxford University Press, vol. 122(1), pages 373-407.
    2. Àlex Arenas & Antonio Cabrales & Leon Danon & Albert Díaz-Guilera & Roger Guimerà & Fernando Vega-Redondo, 2010. "Optimal information transmission in organizations: search and congestion," Review of Economic Design, Springer;Society for Economic Design, vol. 14(1), pages 75-93, March.
    3. Ambrus, Attila & Takahashi, Satoru, 2008. "Multi-sender cheap talk with restricted state spaces," Theoretical Economics, Econometric Society, vol. 3(1), March.
    4. Ivanov, Maxim, 2010. "Informational control and organizational design," Journal of Economic Theory, Elsevier, vol. 145(2), pages 721-751, March.
    5. Ivanov, Maxim, 2010. "Communication via a strategic mediator," Journal of Economic Theory, Elsevier, vol. 145(2), pages 869-884, March.
    6. Robert J. Aumann & Sergiu Hart, 2003. "Long Cheap Talk," Econometrica, Econometric Society, vol. 71(6), pages 1619-1660, November.
      • 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.
    7. Timothy van Zandt, 1999. "Real-Time Decentralized Information Processing as a Model of Organizations with Boundedly Rational Agents," Review of Economic Studies, Oxford University Press, vol. 66(3), pages 633-658.
    8. Galeotti, Andrea & Ghiglino, Christian & Squintani, Francesco, 2009. "Strategic Information Transmission in Networks," Economics Discussion Papers 2974, University of Essex, Department of Economics.
    9. 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.
    10. Visser, Bauke, 2000. "Organizational communication structure and performance," Journal of Economic Behavior & Organization, Elsevier, vol. 42(2), pages 231-252, June.
    11. 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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    Citations

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    Cited by:

    1. Takashi Kamihigashi & John Stachurski, 2014. "Partial Stochastic Dominance," Discussion Paper Series DP2014-23, Research Institute for Economics & Business Administration, Kobe University.
    2. Kolotilin, Anton & Li, Hao & Li, Wei, 2013. "Optimal limited authority for principal," Journal of Economic Theory, Elsevier, vol. 148(6), pages 2344-2382.
    3. Liang, Pinghan, 2013. "Optimal delegation via a strategic intermediary," Games and Economic Behavior, Elsevier, vol. 82(C), pages 15-30.
    4. Schopohl, Simon, 2017. "Information transmission in hierarchies," Center for Mathematical Economics Working Papers 570, Center for Mathematical Economics, Bielefeld University.
    5. Buechel, Berno & Hellmann, Tim & Klößner, Stefan, 2015. "Opinion dynamics and wisdom under conformity," Journal of Economic Dynamics and Control, Elsevier, vol. 52(C), pages 240-257.
    6. Simona Fabrizi & Steffen Lippert, 2012. "Due Diligence, Research Joint Ventures, and Incentives to Innovate," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 168(4), pages 588-611, December.
    7. Ying Chen & Sidartha Gordon, 2015. "Information transmission in nested sender–receiver games," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 58(3), pages 543-569, April.
    8. Bimpikis, Kostas & Ozdaglar, Asuman & Acemoglu, Daron, 2014. "Dynamics of information exchange in endogenous social networks," Theoretical Economics, Econometric Society, vol. 9(1), January.
    9. Lu, Shih En, 2017. "Coordination-free equilibria in cheap talk games," Journal of Economic Theory, Elsevier, vol. 168(C), pages 177-208.
    10. repec:aea:aejmic:v:9:y:2017:i:3:p:100-125 is not listed on IDEAS
    11. Ivanov, Maxim, 2014. "Beneficial mediated communication in cheap talk," Journal of Mathematical Economics, Elsevier, vol. 55(C), pages 129-135.
    12. Pinghan Liang, 2010. "Transfer of Authority within Hierarchy," Levine's Working Paper Archive 661465000000000139, David K. Levine.
    13. repec:kap:pubcho:v:173:y:2017:i:1:d:10.1007_s11127-017-0462-8 is not listed on IDEAS
    14. Jordi Brandts & Leonie Gerhards & Lydia Mechtenberg, 2018. "Deliberative Structures and their Impact on Voting Behavior under Social Conflict," Working Papers 1022, Barcelona Graduate School of Economics.
    15. Alonso, Ricardo & Rantakari, Heikki, 2014. "The art of brevity," LSE Research Online Documents on Economics 58681, London School of Economics and Political Science, LSE Library.
    16. Ambrus, Attila & Lu, Shih En, 2014. "Almost fully revealing cheap talk with imperfectly informed senders," Games and Economic Behavior, Elsevier, vol. 88(C), pages 174-189.
    17. 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.

    More about this item

    Keywords

    Cheap talk; intermediation; communication protocols;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • 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

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