In cheap- and costly-talk games, an informed player (the sender) sends a verbal message about its type to an uninformed player (the receiver). The use of Nash equilibrium, and its refinements, implies that the assignment of messages to types is what determines the message’s interpretation. We propose instead an equilibrium concept where the verbal message itself is the crucial piece of new information in the communication process between sender and receiver, and truth and trust functions are incorporated in the inferential process that takes place in parallel. The sender’s message leads the receiver to update priors only if it is comprehensible (i.e., uttered in a language shared by both players), relevant (i.e., more specific than the common priors), and trusted. Trust requires a leap of faith because a verbal message never proves what it states; hence, mistrust equilibria are possible even if an informative equilibrium exists where the sender’s message is true. Trust equilibria may be uninformative, in which case linguistic conventions show through what is not stated, e.g., “This car is a lemon.” This framework strives to integrate, on the one hand, the game-theoretic view that the equilibrium meaning depends on the sender’s strategic incentives, with, on the other, the linguistic view that messages are verbal symbols that convey common understandings through their literal meaning.
|Date of creation:||Feb 2011|
|Date of revision:||Mar 2014|
|Contact details of provider:|| Postal: Av. Córdoba 374, (C1054AAP) Capital Federal|
Phone: (5411) 6314-3000
Fax: (5411) 4314-1654
Web page: http://www.cema.edu.ar/publicaciones/doc_trabajo.html
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ariel Rubinstein, 2000.
"Economics and Language,"
Online economics textbooks,
SUNY-Oswego, Department of Economics, number lang1.
- Rubinstein,Ariel, 2000. "Economics and Language," Cambridge Books, Cambridge University Press, number 9780521593069.
- Rubinstein,Ariel, 2000. "Economics and Language," Cambridge Books, Cambridge University Press, number 9780521789905.
- Rubinstein, A., 1998. "Economics and Language," Papers 14-98, Tel Aviv.
- Ariel Rubinstein, 2005. "Economics and Language," Levine's Bibliography 666156000000000654, UCLA Department of Economics.
- A. Rubinstein, 1999. "Economics and Language," Princeton Economic Theory Papers 00s6, Economics Department, Princeton University.
- Ricardo F. Crespo, 2012. "Models as signs" as "good economic models," Estudios Economicos, Universidad Nacional del Sur, Departamento de Economia, vol. 29(58), pages 1-12, january-j.
- McNollgast, 2007. "The Political Economy of Law," Handbook of Law and Economics, Elsevier.
- Callander, Steven & Wilkie, Simon, 2007. "Lies, damned lies, and political campaigns," Games and Economic Behavior, Elsevier, vol. 60(2), pages 262-286, August.
- Robert J. Leonard, 1992. "Reading Cournot, Reading Nash / or / The Emergence and Stabilization of the Nash equilibrium," Cahiers de recherche du Département des sciences économiques, UQAM 9214, Université du Québec à Montréal, Département des sciences économiques.
- Harsanyi, John C, 1995. "Games with Incomplete Information," American Economic Review, American Economic Association, vol. 85(3), pages 291-303, June.
- Harsanyi, John C., 1994. "Games with Incomplete Information," Nobel Prize in Economics documents 1994-1, Nobel Prize Committee.
- Hefei Wang, 2009. "Reputation acquisition of underwriter analysts - Theory and evidence," Journal of Applied Economics, Universidad del CEMA, vol. 12, pages 331-363, November.
- Navin Kartik, 2009. "Strategic Communication with Lying Costs," Review of Economic Studies, Oxford University Press, vol. 76(4), pages 1359-1395.
- Navin Kartik, 2008. "Strategic Communication with Lying Costs," 2008 Meeting Papers 350, Society for Economic Dynamics.
- Elinor Ostrom, 2010. "Beyond Markets and States: Polycentric Governance of Complex Economic Systems," American Economic Review, American Economic Association, vol. 100(3), pages 641-672, June.
- Ostrom, Elinor, 2009. "Beyond Markets and States: Polycentric Governance of Complex Economic Systems," Nobel Prize in Economics documents 2009-4, Nobel Prize Committee.
- Coase, R H, 1976. "Adam Smith's Views of Man," Journal of Law and Economics, University of Chicago Press, vol. 19(3), pages 529-546, October.
- Farrell Joseph, 1993. "Meaning and Credibility in Cheap-Talk Games," Games and Economic Behavior, Elsevier, vol. 5(4), pages 514-531, October.
- Joseph Farrell., 1986. "Meaning and Credibility in Cheap-Talk Games," Economics Working Papers 8609, University of California at Berkeley.
- J. Farrell, 2010. "Meaning and Credibility in Cheap Talk Games," Levine's Working Paper Archive 533, David K. Levine.
- Farrell, Joseph, 1986. "Meaning and Credibility in Cheap-Talk Games," Department of Economics, Working Paper Series qt4968n3fz, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- repec:cup:cbooks:9780521555838 is not listed on IDEAS
- Crawford, Vincent P & Sobel, Joel, 1982. "Strategic Information Transmission," Econometrica, Econometric Society, vol. 50(6), pages 1431-1451, November.
- V. Crawford & J. Sobel, 2010. "Strategic Information Transmission," Levine's Working Paper Archive 544, David K. Levine.
- George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, Oxford University Press, vol. 84(3), pages 488-500.
- Ken Binmore, 1994. "Game Theory and the Social Contract, Volume 1: Playing Fair," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262023636, July.
- Kartik, Navin & Ottaviani, Marco & Squintani, Francesco, 2007. "Credulity, lies, and costly talk," Journal of Economic Theory, Elsevier, vol. 134(1), pages 93-116, May. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:cem:doctra:443. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Valeria Dowding)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.