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Information Design in Cheap Talk

Author

Listed:
  • Qianjun Lyu

    (University of Bonn)

  • Wing Suen

    (University of HongKong)

Abstract

An uninformed sender publicly commits to an informative experiment about an uncertain state, privately observes its outcome, and sends a cheap-talk message to a receiver. We provide an algorithm valid for arbitrary state-dependent preferences that will determine the sender’s optimal experiment, and give sufficient conditions for information design to be valuable or not under different payoff structures. These conditions depend more on marginal incentives—how payoffs vary with the state—than on the alignment of sender’s and receiver’s rankings over actions within a state.

Suggested Citation

  • Qianjun Lyu & Wing Suen, 2022. "Information Design in Cheap Talk," ECONtribute Discussion Papers Series 199, University of Bonn and University of Cologne, Germany.
    • Handle: RePEc:ajk:ajkdps:199
    as

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    File URL: https://www.econtribute.de/RePEc/ajk/ajkdps/ECONtribute_199_2022.pdf
    File Function: First version, 2022
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    References listed on IDEAS

    as
    1. Inga Deimen & Dezső Szalay, 2019. "Delegated Expertise, Authority, and Communication," American Economic Review, American Economic Association, vol. 109(4), pages 1349-1374, April.
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    4. Elliot Lipnowski & Doron Ravid & Denis Shishkin, 2022. "Persuasion via Weak Institutions," Journal of Political Economy, University of Chicago Press, vol. 130(10), pages 2705-2730.
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    6. Pei, Harry Di, 2015. "Communication with endogenous information acquisition," Journal of Economic Theory, Elsevier, vol. 160(C), pages 132-149.
    7. Nguyen, Anh & Tan, Teck Yong, 2021. "Bayesian persuasion with costly messages," Journal of Economic Theory, Elsevier, vol. 193(C).
    8. Mike Felgenhauer & Elisabeth Schulte, 2014. "Strategic Private Experimentation," American Economic Journal: Microeconomics, American Economic Association, vol. 6(4), pages 74-105, November.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Mark Whitmeyer & Kun Zhang, 2022. "Costly Evidence and Discretionary Disclosure," Papers 2208.04922, arXiv.org.

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    More about this item

    Keywords

    Information design; cheap talk;

    JEL classification:

    • 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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