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Vertical conflict of interest and horizontal inequities

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  • Sémirat, S.

Abstract

We analyze a cheap talk game, à la Crawford and Sobel, in a two dimensional framework, with uniform prior, quadratic preferences and binary signaling rule. Credible information is revealed from the Sender to the Receiver when the conflict of interest vanishes through the alternative issues. The literature has focused on symmetrical equilibria and their sustainability upon limited exogenous asymmetry in preferences. We exhibit a second type of equilibrium, with endogenous asymmetry with respect to the revealed information. This type of equilibrium occurs with or without conflict of interest between the players, and is introduced by the multi-dimensionality. However, the conflict of interest conditions the design of decisions and their intrinsic meaning. Finally, we derive the existence of an influential equilibria for any conflict of interest.

Suggested Citation

  • Sémirat, S., 2016. "Vertical conflict of interest and horizontal inequities," Working Papers 2016-06, Grenoble Applied Economics Laboratory (GAEL).
    • Handle: RePEc:gbl:wpaper:2016-06
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    File URL: https://gael.univ-grenoble-alpes.fr/sites/gael/files/doc-recherche/WP/A2016/gael2016-06.pdf
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    References listed on IDEAS

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    5. Chakraborty, Archishman & Harbaugh, Rick, 2007. "Comparative cheap talk," Journal of Economic Theory, Elsevier, vol. 132(1), pages 70-94, January.
      • Archishman Chakraborty & Rick Harbaugh, 2004. "Comparative Cheap Talk," Working Papers 2004-08, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    6. Dewatripont, Mathias & Jewitt, Ian & Tirole, Jean, 2000. "Multitask agency problems: Focus and task clustering," European Economic Review, Elsevier, vol. 44(4-6), pages 869-877, May.
    7. Jäger, Gerhard & Koch-Metzger, Lars & Riedel, Frank, 2011. "Voronoi languages. Equilibria in cheap-talk games with high-dimensional types and few signals," Center for Mathematical Economics Working Papers 420, Center for Mathematical Economics, Bielefeld University.
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    More about this item

    Keywords

    CHEAP TALK; ASYMMETRIC INFORMATION; INEQUITY;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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