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Cheap Talk

Author

Listed:
  • Joseph Farrell
  • Matthew Rabin

Abstract

Economists often ask how private information is shared through markets, costly signaling, and other mechanisms. Yet most information sharing is done through ordinary, informal talk. Economists are inconsistent in their view of such 'cheap talk': sometimes it is supposed that communication generally leads to efficient equilibria; other times it is supposed that since 'talk is cheap,' it is never credible. The authors think both views are wrong. In this paper, they describe what some recent research in game theory teaches about when people will convey private information by cheap talk.

Suggested Citation

  • Joseph Farrell & Matthew Rabin, 1996. "Cheap Talk," Journal of Economic Perspectives, American Economic Association, vol. 10(3), pages 103-118, Summer.
    • Handle: RePEc:aea:jecper:v:10:y:1996:i:3:p:103-18
    Note: DOI: 10.1257/jep.10.3.103
    as

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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.10.3.103
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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