A note on optimal cheap talk equilibria in a discrete state space

Alexander Frug

doi:10.1016/j.geb.2016.08.004

A note on optimal cheap talk equilibria in a discrete state space

Alexander Frug

Research output: Contribution to journal › Article › peer-review

Abstract

A discrete version of Crawford and Sobel's (1982) cheap talk model is considered. Unlike in the continuous case, limiting attention to partitional equilibria is with loss of generality. The need to consider equilibria that are non-partitional complicates the analysis. It is shown that if utility functions are concave and the sender is upwardly biased, then the receiver's optimal equilibrium is necessarily partitional. Based on this result, a simple characterization of the optimal equilibrium for the discrete uniform quadratic case is proposed.

Original language	English
Pages (from-to)	180-185
Number of pages	6
Journal	Games and Economic Behavior
Volume	99
DOIs	https://doi.org/10.1016/j.geb.2016.08.004
State	Published - 1 Sep 2016
Externally published	Yes

Keywords

Discrete cheap talk
Partitional equilibria

ASJC Scopus subject areas

Finance
Economics and Econometrics

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10.1016/j.geb.2016.08.004

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abstract = "A discrete version of Crawford and Sobel's (1982) cheap talk model is considered. Unlike in the continuous case, limiting attention to partitional equilibria is with loss of generality. The need to consider equilibria that are non-partitional complicates the analysis. It is shown that if utility functions are concave and the sender is upwardly biased, then the receiver's optimal equilibrium is necessarily partitional. Based on this result, a simple characterization of the optimal equilibrium for the discrete uniform quadratic case is proposed.",

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AB - A discrete version of Crawford and Sobel's (1982) cheap talk model is considered. Unlike in the continuous case, limiting attention to partitional equilibria is with loss of generality. The need to consider equilibria that are non-partitional complicates the analysis. It is shown that if utility functions are concave and the sender is upwardly biased, then the receiver's optimal equilibrium is necessarily partitional. Based on this result, a simple characterization of the optimal equilibrium for the discrete uniform quadratic case is proposed.

KW - Discrete cheap talk

KW - Partitional equilibria

UR - https://www.scopus.com/pages/publications/84985991278

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DO - 10.1016/j.geb.2016.08.004

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SP - 180

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JO - Games and Economic Behavior

JF - Games and Economic Behavior

ER -

A note on optimal cheap talk equilibria in a discrete state space

Abstract

Keywords

ASJC Scopus subject areas

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