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Ambiguous Cheap Talk

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  • Longjian Li

Abstract

This paper explores how ambiguity affects communication. We consider a cheap talk model in which the receiver evaluates the sender's message with respect to its worst-case expected payoff generated by multiplier preferences. We characterize the receiver's optimal strategy and show that the receiver's posterior action is consistent with his ex-ante action. We find that in some situations, ambiguity improves communication by shifting the receiver's optimal action upwards, and these situations are not rare.

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  • Longjian Li, 2022. "Ambiguous Cheap Talk," Papers 2209.08494, arXiv.org.
    • Handle: RePEc:arx:papers:2209.08494
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    References listed on IDEAS

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