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Strategic Information Transmission with Budget Constraint

Author

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  • A.K.S. Chand

    (Department of Economics, University Of Venice Ca� Foscari)

Abstract

In this paper, I discuss a Cheap Talk model that arises during the allocation of a limited budget to multiple Senders by a Receiver with private communication. The Receiver's utility is the sum of the utilities of the Senders. Considering quadratic utility functions, I show that there is no fully revealing equilibrium with budget constraint. I also show that a higher budget facilitates information transmission to the Receiver in terms of ex-ante expected utility by considering (1) an equilibrium where only one Sender reveals truthfully, (2) a symmetric equilibrium with two intervals and (3) a commitment strategy by the Receiver where only one Sender receives his desired amount. The commitment strategy is doing better than the other two types of equilibria for budget more than a particular value. This requires us to look for equilibria with higher number of intervals which does better than the commitment strategy.

Suggested Citation

  • A.K.S. Chand, 2012. "Strategic Information Transmission with Budget Constraint," Working Papers 2012_19, Department of Economics, University of Venice "Ca' Foscari".
    • Handle: RePEc:ven:wpaper:2012_19
    as

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    References listed on IDEAS

    as
    1. repec:hoo:wpaper:e-89-7 is not listed on IDEAS
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Cheap Talk; Multiple Senders; Budget Constraint;
    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
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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