Slides-SIT1-article - F Koessler Strategic Information Transmission Cheap Talk Games 1 Strategic Information Transmission Cheap Talk Games Outline

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Unformatted text preview: F. Koessler / November 12, 2008 Strategic Information Transmission: Cheap Talk Games 1/ Strategic Information Transmission: Cheap Talk Games Outline (November 12, 2008) • Credible information under cheap talk: Examples • Geometric characterization of Nash equilibrium outcomes • Expertise with a biased interested party • Communication in organizations: Delegation vs. cheap talk vs. commitment • Multiple Senders and Multidimensional Cheap Talk • Lobbying with several audiences • Some experimental evidence 2/ General References : • Bolton and Dewatripont (2005, chap. 5) “Disclosure of Private Certifiable Information,” in “Contract Theory” • Farrell and Rabin (1996): “Cheap Talk,” Journal of Economic Perspectives • Forges (1994): “Non-Zero Sum Repeated Games and Information Transmission,” in Essays in Game Theory: In Honor of Michael Maschler • Koessler and Forges (2006): “Multistage Communication with and without Verifiable Types”, International Journal of Game Theory • Kreps and Sobel (1994) : “Signalling,” in “Handbook of Game Theory” vol. 2 • Myerson (1991, chap. 6): “Games of communication,” in “Game Theory, Analysis of Conflict” • Sobel (2007): “Signalling Games” F. Koessler / November 12, 2008 Strategic Information Transmission: Cheap Talk Games 3/ Cheap talk = communication which is • strategic and non-binding (no contract, no commitment) • costless, without direct impact on payoffs • direct / face-to-face / unmediated • possibly several communication stages • soft information (not verifiable, not certifiable, not provable) ⇒ different, e.g., from information revelation by a price system in rational expectation general equilibrium models (Radner, 1979), from mechanism design (contract), from signaling ` a la Spence (1973),. . . In its simplest form, a cheap talk game in a specific signaling games in which messages are costless (i.e., do not enter into players’ utility functions) 4/ Example 1. (Signal of productivity in a labor market) Extremely simplified version of Spence (1973) model of education: The sender (the expert) is a worker with private information about his ability k ∈ { k L , k H } = { 1 , 3 } The receiver (the decisionmaker) is an employer who must chose a salary j ∈ { j L , j M ,j H } = { 1 , 2 , 3 } The worker’s productivity is assumed to be equal to his ability Perfect competition among employers, so the employer chooses a salary equal to the expected productivity of the worker (zero expected profits) The worker chooses a level of education e ∈ { e L ,e H } = { , 3 } (which does no affect his productivity, but is costly )    A k ( j ) = j − c ( k, e ) = j − e/k (worker) B k ( j ) = − bracketleftbig k − j bracketrightbig 2 (employer) F. Koessler / November 12, 2008 Strategic Information Transmission: Cheap Talk Games 5/ k H k L N e H e L Worker e H e L Worker Employer Employer j L (1 , 0) j H (3 , − 4) j M (2 , − 1) j...
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This note was uploaded on 01/23/2011 for the course ECONOMICS gt512 taught by Professor Breviart during the Spring '10 term at Télécom Paris.

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Slides-SIT1-article - F Koessler Strategic Information Transmission Cheap Talk Games 1 Strategic Information Transmission Cheap Talk Games Outline

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