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Partial Language Competence

Author

Listed:
  • Jeanne Hagenbach

    (Département d'économie)

  • Frédéric Koessler

    (Ecole d'Économie de Paris - Paris School of Economics (PSE))

Abstract

This paper proposes an equilibrium concept, Language-Based Expectation Equilibrium, which accounts for partial language understanding in sender-receiver cheap talk games. Each player is endowed with a privately known language competence which represents all the messages that he understands. For the messages he does not understand, he has correct but only coarse expectations about the equilibrium strategies of the other player. In general, a language-based expectation equilibrium outcome differs from Nash and communication equilibrium outcomes, but is always a Bayesian solution. Partial language competence of the sender rationalizes information transmission and lies in pure persuasion problems, and facilitates information transmission from a moderately biased sender.

Suggested Citation

  • Jeanne Hagenbach & Frédéric Koessler, 2019. "Partial Language Competence," Sciences Po publications 2019-08, Sciences Po.
    • Handle: RePEc:spo:wpmain:info:hdl:2441/3b2230a4419v9ojcpu27tsdrtb
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Analogy-based expectations; Bayesian solution; Bounded rationality; cheap talk; Language; Pure persuasion; Strategic information transmission;
    All these keywords.

    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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