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Nash Codes for Noisy Channels

Author

Listed:
  • Penélope Hernández

    () (ERI-CES)

  • Bernhard von Stengel

    () (London School of Economics)

Abstract

This paper studies the stability of communication protocols that deal with transmission errors. We consider a coordination game between an informed sender and an uninformed decision maker, the receiver, who communicate over a noisy channel. The sender's strategy, called a code, maps states of nature to signals. The receiver's best response is to decode the received channel output as the state with highest expected receiver payoff. Given this decoding, an equilibrium or ``Nash code'' results if the sender encodes every state as prescribed. We show two theorems that give sufficient conditions for Nash codes. First, a receiver-optimal code defines a Nash code. A second, more surprising observation holds for communication over a binary channel which is used independently a number of times, a basic model of information transmission: Under a minimal ``monotonicity'' requirement for breaking ties when decoding, which holds generically, any code is a Nash code.

Suggested Citation

  • Penélope Hernández & Bernhard von Stengel, 2012. "Nash Codes for Noisy Channels," Discussion Papers in Economic Behaviour 0912, University of Valencia, ERI-CES.
  • Handle: RePEc:dbe:wpaper:0912
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    File URL: https://www.uv.es/erices/RePEc/WP/2012/0912.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    sender-receiver game; communication; noisy channel;

    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

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