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Credible Communication in Long-Term Relationships

Author

Listed:
  • Steven Kivinen

    (University of Graz, Austria)

  • Christoph Kuzmics

    (University of Graz, Austria)

Abstract

We study communication between an informed Expert and an uninformed Decision-Maker who face a sequence of decision problems with conflicting interests. Even when both are patient and monitoring is public the Decision-Maker's most-preferred outcome is not credibly sustainable. Any strategy that implements it necessarily involves threats that are not immune to renegotiation. Any credible and efficient equilibrium entails a compromise, thereby giving the Expert information rents. The Decision-Maker's best credible efficient equilibrium varies with the preferences of the Expert and with the Decision Maker's initial uncertainty.

Suggested Citation

  • Steven Kivinen & Christoph Kuzmics, 2026. "Credible Communication in Long-Term Relationships," Graz Economics Papers 2026-19, University of Graz, Department of Economics.
    • Handle: RePEc:grz:wpaper:2026-19
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    Keywords

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    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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