Comparative Cheap Talk
When are comparative statements credible? For instance, when can a professor rank different students for an employer, or a stock analyst rank different stocks for a client? We show that simple complementarity conditions ensure that an expert with private information about multiple issues can credibly rank the issues for a decision maker. By restricting the expert’s ability to exaggerate, multidimensional cheap talk of this form permits communication when it would not be credible in a single dimension. The communication gains can be substantial with even a couple of issues, and the complete ranking is asymptotically equivalent to full revelation as the number of issues becomes large. Nevertheless, partial rankings are sometimes more credible and/or more profitable for the expert than the complete ranking. We confirm the robustness of comparative cheap talk to asymmetries that are not too large. Moreover, we show that for a sufficiently large number of independent issues there are always some issues sufficiently symmetric to permit influential cheap talk.
|Date of creation:||2004|
|Date of revision:|
|Publication status:||Published in Journal of Economic Theory, 2007|
|Contact details of provider:|| Postal: 1309 East Tenth Street, Room 451, Bloomington, IN 47405-1701|
Web page: http://kelley.iu.edu/bepp/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Marco Battaglini, 2000.
"Multiple Referrals and Multidimensional Cheap Talk,"
Econometric Society World Congress 2000 Contributed Papers
1557, Econometric Society.
- Marco Battaglini, 2002. "Multiple Referrals and Multidimensional Cheap Talk," Econometrica, Econometric Society, vol. 70(4), pages 1379-1401, July.
- Marco Battaglini, 1999. "Multiple Referrals and Multidimensional Cheap Talk," Discussion Papers 1295, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Archishman Chakraborty & Nandini Gupta & Rick Harbaugh, 2004.
"Best Foot Forward or Best for Last in a Sequential Auction?,"
2004-07, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
- Archishman Chakraborty & Nandini Gupta & Rick Harbaugh, 2006. "Best foot forward or best for last in a sequential auction?," RAND Journal of Economics, RAND Corporation, vol. 37(1), pages 176-194, 03.
- Archishman Chakraborty & Nandini Gupta & Rick Harbaugh, 2000. "Best Foot Forward or Best for Last in a Sequential Auction?," Claremont Colleges Working Papers 2000-43, Claremont Colleges.
- 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.
- Morgan, J. & Stocken, P., 1998.
"An Analysis of Stock Recommendations,"
204, Princeton, Woodrow Wilson School - Public and International Affairs.
- William Chan & Hao Li & Wing Suen, 2005.
"A Signaling Theory of Grade Inflation,"
tecipa-222, University of Toronto, Department of Economics.
- Krishna, Vijay & Morgan, John, 2004. "The art of conversation: eliciting information from experts through multi-stage communication," Journal of Economic Theory, Elsevier, vol. 117(2), pages 147-179, August.
- Joel Sobel, 1985. "A Theory of Credibility," Review of Economic Studies, Oxford University Press, vol. 52(4), pages 557-573.
- Wouter Dessein, 2000.
"Authority and Communication in Organizations,"
Econometric Society World Congress 2000 Contributed Papers
1747, Econometric Society.
- David Spector, 2000.
"Rational Debate and One-Dimensional Conflict,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 115(1), pages 181-200.
- Levy, Gilat & Razin, Ronny, 2004.
"Multidimensional Cheap Talk,"
CEPR Discussion Papers
4393, C.E.P.R. Discussion Papers.
- Sandeep Baliga & Stephen Morris, 2000.
"Coordination, Spillovers, and Cheap Talk,"
1301, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Michael Ostrovsky & Michael Schwarz, 2003. "Equilibrium Information Disclosure: Grade Inflation and Unraveling," Harvard Institute of Economic Research Working Papers 1996, Harvard - Institute of Economic Research.
- Athey, Susan, 2002. "Monotone Comparative Statics Under Uncertainty," Scholarly Articles 3372263, Harvard University Department of Economics.
- Susan Athey, 2002. "Monotone Comparative Statics under Uncertainty," The Quarterly Journal of Economics, Oxford University Press, vol. 117(1), pages 187-223.
- Mas-Colell,Andreu, 1990.
"The Theory of General Economic Equilibrium,"
Cambridge University Press, number 9780521388702, December.
- Paul E. Fischer & Phillip C. Stocken, 2001. "Imperfect Information and Credible Communication," Journal of Accounting Research, Wiley Blackwell, vol. 39(1), pages 119-134, 06.
- V. Crawford & J. Sobel, 2010.
"Strategic Information Transmission,"
Levine's Working Paper Archive
544, David K. Levine.
- Costrell, Robert M, 1994. "A Simple Model of Educational Standards," American Economic Review, American Economic Association, vol. 84(4), pages 956-71, September.
- Archishman Chakraborty & Nandini Gupta & Rick Harbaugh, 2002. "Seller Cheap Talk in Common Value Auctions," Claremont Colleges Working Papers 2002-30, Claremont Colleges.
- Stephen Morris, 2001.
Journal of Political Economy,
University of Chicago Press, vol. 109(2), pages 231-265, April.
- Joseph Farrell, 1987. "Cheap Talk, Coordination, and Entry," RAND Journal of Economics, The RAND Corporation, vol. 18(1), pages 34-39, Spring.
- Marco Ottaviani & Francesco Squintani, 2002. "Non-Fully Strategic Information Transmission," Wallis Working Papers WP29, University of Rochester - Wallis Institute of Political Economy.
- Chakraborty, Archishman & Harbaugh, Rick, 2003. "Cheap talk comparisons in multi-issue bargaining," Economics Letters, Elsevier, vol. 78(3), pages 357-363, March.
- Matthew O Jackson & Hugo F Sonnenschein, 2007. "Overcoming Incentive Constraints by Linking Decisions -super-1," Econometrica, Econometric Society, vol. 75(1), pages 241-257, 01.
- Phillip C. Stocken, 2000. "Credibility of Voluntary Disclosure," RAND Journal of Economics, The RAND Corporation, vol. 31(2), pages 359-374, Summer.
- Joseph Farrell & Matthew Rabin, 1996. "Cheap Talk," Journal of Economic Perspectives, American Economic Association, vol. 10(3), pages 103-118, Summer.
When requesting a correction, please mention this item's handle: RePEc:iuk:wpaper:2004-08. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Rick Harbaugh)
If references are entirely missing, you can add them using this form.