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Communicating about Confidence: Cheap Talk with an Ambiguity-Averse Receiver

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  • Philippe Colo

Abstract

An expert, who is only informed of the probability of possible states, communicates with a decision-maker through cheap talk. The decision-maker considers different probability distributions over states as possible and is ambiguity averse. I show that all equilibria of the game are equivalent to partitional ones and that the most informative is interim dominant for the expert. Information transmission regarding probabilities that are bad news for the decision-maker is facilitated by ambiguity aversion. However, ambiguity aversion also makes information transmission impossible, whatever the preference misalignment, regarding probabilities that are good news for him.

Suggested Citation

  • Philippe Colo, 2024. "Communicating about Confidence: Cheap Talk with an Ambiguity-Averse Receiver," American Economic Journal: Microeconomics, American Economic Association, vol. 16(3), pages 43-75, August.
    • Handle: RePEc:aea:aejmic:v:16:y:2024:i:3:p:43-75
    DOI: 10.1257/mic.20220166
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    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • 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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