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Mode of ambiguous communication

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  • Kellner, Christian
  • Thordal-Le Quement, Mark

Abstract

We study cheap talk communication in a simple two actions-two states model featuring ambiguous priors. First, we find that in equilibrium, S typically mixes between messages triggering different behavior by R while R himself mixes after some message. Technically, the mixing performed by S is equivalent to mixing over classical partitional strategies. We interpret mixing by respectively S or R as embodying two different modes of ambiguous communication. Second, we find that for sufficiently high ambiguity, more than two messages are often necessary to implement the optimal decision rule of S, though only two actions are available to R. If only two messages are available and S faces his preference twin, he may be unable to implement his optimal decision rule and influential communication may be altogether impossible. We remark that these results would not emerge in an expected utility environment. Third, we find that there often exist influential equilibria that do not implement the optimal decision rule of S, which is not the case in the absence of ambiguity. Fourth, we show that the addition of a little ambiguity may generate influential communication that is unambiguously advantageous to S. Fifth, we consider a smooth version of our model and find that some of our key findings extend to this setting.

Suggested Citation

  • Kellner, Christian & Thordal-Le Quement, Mark, 2013. "Mode of ambiguous communication," Bonn Econ Discussion Papers 10/2013, University of Bonn, Bonn Graduate School of Economics (BGSE).
  • Handle: RePEc:zbw:bonedp:102013
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    References listed on IDEAS

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    Cited by:

    1. Jonas Hedlund & T. Florian Kauffeldt & Malte Lammert, 2021. "Persuasion under ambiguity," Theory and Decision, Springer, vol. 90(3), pages 455-482, May.
    2. Grant, Simon & Stauber, Ronald, 2022. "Delegation and ambiguity in correlated equilibrium," Games and Economic Behavior, Elsevier, vol. 132(C), pages 487-509.
    3. Kellner, Christian & Le Quement, Mark T., 2018. "Endogenous ambiguity in cheap talk," Journal of Economic Theory, Elsevier, vol. 173(C), pages 1-17.
    4. Galanis, S. & Ioannou, C. & Kotronis, S., 2019. "Information Aggregation Under Ambiguity: Theory and Experimental Evidence," Working Papers 20/05, Department of Economics, City University London.
    5. Eran Hanany & Peter Klibanoff & Sujoy Mukerji, 2020. "Incomplete Information Games with Ambiguity Averse Players," American Economic Journal: Microeconomics, American Economic Association, vol. 12(2), pages 135-187, May.
    6. Evren, Özgür, 2019. "Recursive non-expected utility: Connecting ambiguity attitudes to risk preferences and the level of ambiguity," Games and Economic Behavior, Elsevier, vol. 114(C), pages 285-307.
    7. Auster, Sarah & Kellner, Christian, 2022. "Robust bidding and revenue in descending price auctions," Journal of Economic Theory, Elsevier, vol. 199(C).
    8. Li, Chen & Turmunkh, Uyanga & Wakker, Peter P., 2020. "Social and strategic ambiguity versus betrayal aversion," Games and Economic Behavior, Elsevier, vol. 123(C), pages 272-287.
    9. Rui Tang, 2020. "A Theory of Updating Ambiguous Information," Papers 2012.13650, arXiv.org.
    10. Beauchêne, Dorian & Li, Jian & Li, Ming, 2019. "Ambiguous persuasion," Journal of Economic Theory, Elsevier, vol. 179(C), pages 312-365.
    11. Larry G. Epstein & Yoram Halevy, 2019. "Hard-to-Interpret Signals," Working Papers tecipa-634, University of Toronto, Department of Economics.
    12. Colo, Philippe, 2021. "Expert-based Knowledge: Communicating over Scientific Models," MPRA Paper 110434, University Library of Munich, Germany.

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    More about this item

    Keywords

    cheap talk; ambiguity;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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