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Cheap Talk with Correlated Signals

Author

Listed:
  • A.K.S. Chand
  • Sergio Currarini
  • Giovanni Ursino

    (Università Cattolica del Sacro Cuore
    Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore)

Abstract

We consider a game of information transmission, with one informed decision maker gathering information from one or more informed senders. Private information is (conditionally) correlated across players, and communication is cheap talk. For the one sender case, we show that correlation unambiguously tightens the existence conditions for a truth-telling equilibrium. We then generalize the model to an arbitrary number of senders, and we find that, in this case, the effect of correlation on the incentives to report information truthfully is non monotone, and correlation may discipline senders equilibrium behavior, making it easier to sustain truth-telling.

Suggested Citation

  • A.K.S. Chand & Sergio Currarini & Giovanni Ursino, 2015. "Cheap Talk with Correlated Signals," DISCE - Working Papers del Dipartimento di Economia e Finanza def024, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    • Handle: RePEc:ctc:serie1:def024
    as

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    References listed on IDEAS

    as
    1. John Morgan & Phillip C. Stocken, 2008. "Information Aggregation in Polls," American Economic Review, American Economic Association, vol. 98(3), pages 864-896, June.
    2. Galeotti, Andrea & Ghiglino, Christian & Squintani, Francesco, 2013. "Strategic information transmission networks," Journal of Economic Theory, Elsevier, vol. 148(5), pages 1751-1769.
    3. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
    4. Jeanne Hagenbach & Frédéric Koessler, 2010. "Strategic Communication Networks," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 77(3), pages 1072-1099.
    5. Crawford, Vincent P & Sobel, Joel, 1982. "Strategic Information Transmission," Econometrica, Econometric Society, vol. 50(6), pages 1431-1451, November.
    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

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