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Neutrally Stable Outcomes in Cheap Talk Coordination Games


  • Abhijit Banerjee
  • Jörgen W. Weibull


This paper examines equilibrium and stability in symmetric two- player cheap-talk games. In particular, we characterize the set of neutrally stable outcomes infinite cheap-talk 2 x 2 coordination games. This set is finite and does not depend on risk-dominance relations. As the number of messages goes to infinity, this set expands to a countable limit set that has exactly one cluster point, the Pareto efficient Nash equilibrium payoff. In contrast, the corresponding limit set of strictly perfect outcomes is shown to be dense in the interval spanned by the Nash equilibrium payoffs of the game. It is also shown that the limit set of neutrally stable outcomes coincides with the set of neutrally stable outcomes when the message set is (countably) infinite.

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  • Abhijit Banerjee & Jörgen W. Weibull, "undated". "Neutrally Stable Outcomes in Cheap Talk Coordination Games," ELSE working papers 012, ESRC Centre on Economics Learning and Social Evolution.
  • Handle: RePEc:els:esrcls:012

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    References listed on IDEAS

    1. Bomze Immanuel M. & Weibull Jorgen W., 1995. "Does Neutral Stability Imply Lyapunov Stability?," Games and Economic Behavior, Elsevier, vol. 11(2), pages 173-192, November.
    2. Warneryd, Karl, 1991. "Evolutionary stability in unanimity games with cheap talk," Economics Letters, Elsevier, vol. 36(4), pages 375-378, August.
    3. Blume Andreas & Kim Yong-Gwan & Sobel Joel, 1993. "Evolutionary Stability in Games of Communication," Games and Economic Behavior, Elsevier, vol. 5(4), pages 547-575, October.
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    6. Sobel, Joel, 1993. "Evolutionary stability and efficiency," Economics Letters, Elsevier, vol. 42(2-3), pages 301-312.
    7. Warneryd, Karl, 1992. "Communication, correlation, and symmetry in bargaining," Economics Letters, Elsevier, vol. 39(3), pages 295-300, July.
    8. Bhaskar, V., 1998. "Noisy Communication and the Evolution of Cooperation," Journal of Economic Theory, Elsevier, vol. 82(1), pages 110-131, September.
    9. Kohlberg, Elon & Mertens, Jean-Francois, 1986. "On the Strategic Stability of Equilibria," Econometrica, Econometric Society, vol. 54(5), pages 1003-1037, September.
    10. Warneryd Karl, 1993. "Cheap Talk, Coordination, and Evolutionary Stability," Games and Economic Behavior, Elsevier, vol. 5(4), pages 532-546, October.
    11. A. J. Robson, 2010. "Efficiency in Evolutionary Games: Darwin, Nash and the Secret Handshake," Levine's Working Paper Archive 540, David K. Levine.
    12. Binmore, Ken & Samuelson, Larry, 1997. "Muddling Through: Noisy Equilibrium Selection," Journal of Economic Theory, Elsevier, vol. 74(2), pages 235-265, June.
    13. Kim, Yong-Gwan & Sobel, Joel, 1995. "An Evolutionary Approach to Pre-play Communication," Econometrica, Econometric Society, vol. 63(5), pages 1181-1193, September.
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    Cited by:

    1. Weibull, Jörgen W., 1997. "What have we learned from Evolutionary Game Theory so far?," Working Paper Series 487, Research Institute of Industrial Economics, revised 26 Oct 1998.
    2. Heiner, Ronald Asher, 2002. "Robust Evolution Of Contingent Cooperation In Pure One-Shot Prisoners' Dilemmas. Part I: Vulnerable Contingent Participators Versus Stable Contingent Cooperators," CSLE Discussion Paper Series 2002-09, Saarland University, CSLE - Center for the Study of Law and Economics.
    3. Brian Skyrms, 2003. "Signals, Evolution and the Explanatory Power of Transient Information," Levine's Working Paper Archive 618897000000000799, David K. Levine.
    4. Robert J. Aumann & Sergiu Hart, 2003. "Long Cheap Talk," Econometrica, Econometric Society, vol. 71(6), pages 1619-1660, November.
      • Robert J. Aumann & Sergiu Hart, 2002. "Long Cheap Talk," Discussion Paper Series dp284, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem, revised Nov 2002.
    5. Ellingsen, Tore & Östling, Robert, 2006. "Organizational Structure as the Channeling of Boundedly Rational Pre-play Communication," SSE/EFI Working Paper Series in Economics and Finance 634, Stockholm School of Economics.
    6. Wiseman, Thomas & Yilankaya, Okan, 2001. "Cooperation, Secret Handshakes, and Imitation in the Prisoners' Dilemma," Games and Economic Behavior, Elsevier, vol. 37(1), pages 216-242, October.
    7. Stefano Demichelis & Jorgen W. Weibull, 2008. "Language, Meaning, and Games: A Model of Communication, Coordination, and Evolution," American Economic Review, American Economic Association, vol. 98(4), pages 1292-1311, September.
    8. Demichelis, Stefano & Weibull, Jörgen, 2006. "Efficiency, communication and honesty," SSE/EFI Working Paper Series in Economics and Finance 645, Stockholm School of Economics, revised 28 Nov 2006.
    9. Herold, Florian & Kuzmics, Christoph, 2009. "Evolutionary stability of discrimination under observability," Games and Economic Behavior, Elsevier, vol. 67(2), pages 542-551, November.
    10. Stefano Lovo, 2009. "Preopening and equilibrium selection," Post-Print hal-00495940, HAL.
    11. Heller, Yuval, 2013. "Language, Meaning, and Games: Comment," MPRA Paper 49375, University Library of Munich, Germany.

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