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Communication, Risk and Efficiency in Games

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  • Andreas Blume

    (Univ. of Iowa)

Abstract

This paper studies the evolution of effective pre-play communication in games where a single communication round precedes a simultaneous-move, complete-information game. The paper identifies stable outcomes under population learning dynamics in which individuals with some probability replace their current strategy with a best reply against beliefs supported on a sample of currently used strategies. It is shown that under these conditions the effectiveness of one-sided pre-play communication is inversely related to risk in the underlying game, and to the size of the message space. Multi-sided communication can be shown to be more effective than one-sided communication; i.e., risk and the size of the message space play no role. This requires that all players communicate, have the same preferred equilibrium and messages have some small a priori information content that identifies message profiles that signal agreement on a strict equilibrium in the underlying game.

Suggested Citation

  • Andreas Blume, 1996. "Communication, Risk and Efficiency in Games," Game Theory and Information 9604001, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpga:9604001
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    References listed on IDEAS

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    Cited by:

    1. Charness, Gary, 2000. "Self-Serving Cheap Talk: A Test Of Aumann's Conjecture," Games and Economic Behavior, Elsevier, vol. 33(2), pages 177-194, November.
    2. Andreas Blume & Peter H. Kriss & Roberto A. Weber, 2017. "Pre-play communication with forgone costly messages: experimental evidence on forward induction," Experimental Economics, Springer;Economic Science Association, vol. 20(2), pages 368-395, June.
    3. Stefano Demichelis & Jorgen W. Weibull, 2008. "Language, Meaning, and Games: A Model of Communication, Coordination, and Evolution," American Economic Review, American Economic Association, vol. 98(4), pages 1292-1311, September.
    4. Paola Manzini & Abdolkarim Sadrieh & Nicolaas J. Vriend, 2009. "On Smiles, Winks and Handshakes as Coordination Devices," Economic Journal, Royal Economic Society, vol. 119(537), pages 826-854, April.
    5. Demichelis, Stefano & Weibull, Jörgen, 2006. "Efficiency, communication and honesty," SSE/EFI Working Paper Series in Economics and Finance 645, Stockholm School of Economics, revised 28 Nov 2006.
    6. Claudia M. Landeo & Kathryn E. Spier, 2009. "Naked Exclusion: An Experimental Study of Contracts with Externalities," American Economic Review, American Economic Association, vol. 99(5), pages 1850-1877, December.
    7. Serra-Garcia, Marta & van Damme, Eric & Potters, Jan, 2011. "Hiding an inconvenient truth: Lies and vagueness," Games and Economic Behavior, Elsevier, vol. 73(1), pages 244-261, September.
    8. Sobel, Joel, 2017. "A note on pre-play communication," Games and Economic Behavior, Elsevier, vol. 102(C), pages 477-486.
    9. Andreas Blume, 2011. "The Dog That Did Not Bark: Pre-Play Communication with Foregone Costly Messages," Working Paper 438, Department of Economics, University of Pittsburgh, revised Jan 2011.
    10. Giordani, Paolo E. & Ruta, Michele, 2013. "Coordination failures in immigration policy," Journal of International Economics, Elsevier, vol. 89(1), pages 55-67.
    11. Charness, Gary & Grosskopf, Brit, 2001. "Cheap Talk, Information, and Coordination -Experimental Evidence," University of California at Santa Barbara, Economics Working Paper Series qt55q1f842, Department of Economics, UC Santa Barbara.
    12. Geir B. , Asheim & Voorneveld, Max & W. Weibull, Jörgen, 2009. "Epistemically Stable Strategy Sets," Memorandum 01/2010, Oslo University, Department of Economics.
    13. Kenichi Amaya, 2004. "An Evolutionary Analysis of Pre-Play Communication and Efficiency in Games," Discussion Paper Series 165, Research Institute for Economics & Business Administration, Kobe University.
    14. Geir B. Asheim & Mark Voorneveld & Jörgen W. Weibull, 2016. "Epistemically Robust Strategy Subsets," Games, MDPI, vol. 7(4), pages 1-16, November.
    15. Ellingsen, Tore & Östling, Robert, 2006. "Organizational Structure as the Channeling of Boundedly Rational Pre-play Communication," SSE/EFI Working Paper Series in Economics and Finance 634, Stockholm School of Economics.
    16. Tore Ellingsen & Robert Östling, 2010. "When Does Communication Improve Coordination?," American Economic Review, American Economic Association, vol. 100(4), pages 1695-1724, September.
    17. Banerjee, Simanti & Cason, Timothy N. & de Vries, Frans P. & Hanley, Nick, 2017. "Transaction costs, communication and spatial coordination in Payment for Ecosystem Services Schemes," Journal of Environmental Economics and Management, Elsevier, vol. 83(C), pages 68-89.
    18. Paola Manzini & Abdolkarim Sadrieh & Nicolaas J. Vriend, 2009. "On Smiles, Winks and Handshakes as Coordination Devices," Economic Journal, Royal Economic Society, vol. 119(537), pages 826-854, April.
    19. Peter Wikman, 2022. "Nash blocks," International Journal of Game Theory, Springer;Game Theory Society, vol. 51(1), pages 29-51, March.
    20. Dirk Helbing & Anders Johansson, 2010. "Cooperation, Norms, and Revolutions: A Unified Game-Theoretical Approach," PLOS ONE, Public Library of Science, vol. 5(10), pages 1-15, October.
    21. Vidu, Laurent, 2017. "The minimal quota for a complete and transitive majority relation," Center for Mathematical Economics Working Papers 316, Center for Mathematical Economics, Bielefeld University.
    22. Jonathan Newton, 2018. "Evolutionary Game Theory: A Renaissance," Games, MDPI, vol. 9(2), pages 1-67, May.
    23. Melody Lo, 2021. "Language and coordination games," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 72(1), pages 49-92, July.
    24. Kenichi Amaya, 2006. "Two-Speed Evolution with Pre-Play Communication and Limited Flexibility," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 9(2), pages 310-325, April.
    25. Blume, Andreas & Ortmann, Andreas, 2007. "The effects of costless pre-play communication: Experimental evidence from games with Pareto-ranked equilibria," Journal of Economic Theory, Elsevier, vol. 132(1), pages 274-290, January.

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    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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