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Simple Mediation in a Cheap-Talk Game

Author

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  • Chirantan Ganguly
  • Indrajit Ray

Abstract

In the Crawford-Sobel (uniform, quadratic utility) cheap-talk model, we consider a simple mediation scheme (a communication device) in which the informed agent reports one of N possible elements of a partition to the mediator and then the mediator suggests one of N actions to the uninformed decision-maker according to the probability distribution of the device. We show that such a simple mediated equilibrium cannot improve upon the unmediated N-partition. Crawford-Sobel equilibrium when the preference divergence parameter (bias) is small.

Suggested Citation

  • Chirantan Ganguly & Indrajit Ray, 2011. "Simple Mediation in a Cheap-Talk Game," Discussion Papers 05-08rr, Department of Economics, University of Birmingham.
  • Handle: RePEc:bir:birmec:05-08rr
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    References listed on IDEAS

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    1. Françoise Forges, 2006. "Correlated Equilibrium in Games with Incomplete Information Revisited," Theory and Decision, Springer, vol. 61(4), pages 329-344, December.
    2. Vida, Péter & Forges, Françoise, 2013. "Implementation of communication equilibria by correlated cheap talk: The two-player case," Theoretical Economics, Econometric Society, vol. 8(1), January.
    3. Wouter Dessein, 2002. "Authority and Communication in Organizations," Review of Economic Studies, Oxford University Press, vol. 69(4), pages 811-838.
    4. Blume, Andreas & Board, Oliver J. & Kawamura, Kohei, 2007. "Noisy talk," Theoretical Economics, Econometric Society, vol. 2(4), December.
    5. Goltsman, Maria & Hörner, Johannes & Pavlov, Gregory & Squintani, Francesco, 2009. "Mediation, arbitration and negotiation," Journal of Economic Theory, Elsevier, vol. 144(4), pages 1397-1420, July.
    6. Aumann, Robert J, 1987. "Correlated Equilibrium as an Expression of Bayesian Rationality," Econometrica, Econometric Society, vol. 55(1), pages 1-18, January.
    7. Aumann, Robert J., 1974. "Subjectivity and correlation in randomized strategies," Journal of Mathematical Economics, Elsevier, vol. 1(1), pages 67-96, March.
    8. Kovác, Eugen & Mylovanov, Tymofiy, 2009. "Stochastic mechanisms in settings without monetary transfers: The regular case," Journal of Economic Theory, Elsevier, vol. 144(4), pages 1373-1395, July.
    9. FORGES , Françoise, 1993. "Five Legitimate Definitions of Correlated Equilibrium in Games with Incomplete Information," CORE Discussion Papers 1993009, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    10. Crawford, Vincent P & Sobel, Joel, 1982. "Strategic Information Transmission," Econometrica, Econometric Society, vol. 50(6), pages 1431-1451, November.
    11. Forges, Francoise M, 1986. "An Approach to Communication Equilibria," Econometrica, Econometric Society, vol. 54(6), pages 1375-1385, November.
    12. repec:dau:papers:123456789/157 is not listed on IDEAS
    13. Ivanov, Maxim, 2010. "Communication via a strategic mediator," Journal of Economic Theory, Elsevier, vol. 145(2), pages 869-884, March.
    14. Ying Chen & Navin Kartik & Joel Sobel, 2008. "Selecting Cheap-Talk Equilibria," Econometrica, Econometric Society, vol. 76(1), pages 117-136, January.
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    Cited by:

    1. Frédéric Loss & Estelle Malavolti & Thibaud Vergé, 2013. "Communication and Binary Decisions: Is it Better to Communicate?," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 169(3), pages 451-467, September.
    2. 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.

    More about this item

    Keywords

    Cheap talk; Mediated Equilibrium;

    JEL classification:

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

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