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Robustness of full revelation in multisender cheap talk

Author

Listed:
  • Meyer, Margaret

    (Nuffield College and Department of Economics, Oxford University, and CEPR)

  • Moreno de Barreda, Inés

    (Department of Economics, University of Oxford, and CEPR)

  • Nafziger, Julia

    (Department of Economics and Business, Aarhus University, and CEPR)

Abstract

This paper studies information transmission in a two-sender, multidimensional cheap talk setting where there are exogenous constraints on the (convex) feasible set of policies for the receiver and where the receiver is uncertain about both the directions and the magnitudes of the senders' bias vectors. With the supports of the biases represented by cones, we prove that whenever there exists an equilibrium which fully reveals the state (a FRE), there exists a robust FRE, i.e. one in which small deviations result in only small punishments. We provide a geometric condition, the Local Deterrence Condition, relating the cones of the biases to the frontier of the policy space, that is necessary and sufficient for the existence of a FRE. We also construct a specific policy rule for the receiver, the Min Rule, that supports a robust FRE whenever one exists.

Suggested Citation

  • Meyer, Margaret & Moreno de Barreda, Inés & Nafziger, Julia, 2019. "Robustness of full revelation in multisender cheap talk," Theoretical Economics, Econometric Society, vol. 14(4), November.
    • Handle: RePEc:the:publsh:2597
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    References listed on IDEAS

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    1. Friedman James W. & Samuelson Larry, 1994. "Continuous Reaction Functions in Duopolies," Games and Economic Behavior, Elsevier, vol. 6(1), pages 55-82, January.
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    6. 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.
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    8. Lai, Ernest K. & Lim, Wooyoung & Wang, Joseph Tao-yi, 2015. "An experimental analysis of multidimensional cheap talk," Games and Economic Behavior, Elsevier, vol. 91(C), pages 114-144.
    9. Gilat Levy & Ronny Razin, 2007. "On the Limits of Communication in Multidimensional Cheap Talk: A Comment," Econometrica, Econometric Society, vol. 75(3), pages 885-893, May.
    10. Krishna, Vijay, 2001. "Asymmetric Information and Legislative Rules: Some Amendments," American Political Science Review, Cambridge University Press, vol. 95(2), pages 435-452, June.
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    Citations

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    Cited by:

    1. Deimen, Inga & Szalay, Dezsö, 2014. "Smooth, strategic communication," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100333, Verein für Socialpolitik / German Economic Association.
    2. Meyer, Margaret & Moreno de Barreda, Inés & Nafziger, Julia, 2019. "Robustness of full revelation in multisender cheap talk," Theoretical Economics, Econometric Society, vol. 14(4), November.
    3. Szalay, Dezső & Deimen, Inga, 2015. "Information, authority, and smooth communication in organizations," CEPR Discussion Papers 10969, C.E.P.R. Discussion Papers.
    4. Feddersen, Timothy & Gradwohl, Ronen, 2020. "Decentralized advice," European Journal of Political Economy, Elsevier, vol. 63(C).
    5. Lu, Shih En, 2017. "Coordination-free equilibria in cheap talk games," Journal of Economic Theory, Elsevier, vol. 168(C), pages 177-208.

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    More about this item

    Keywords

    Cheap talk; information transmission; multisender; full revelation; robustness;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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