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Full revelation under optional verification

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  • Schopohl, Simon

Abstract

We analyze a Sender–Receiver game in which the Sender can choose between a costless cheap-talk message and a costly verifiable message. In a discrete setting we state conditions under which the Receiver always learns the true state while the Sender uses different message types in different states. On the contrary we show that such a fully revealing equilibrium does not exist if the state and action space are continuous.

Suggested Citation

  • Schopohl, Simon, 2019. "Full revelation under optional verification," Economics Letters, Elsevier, vol. 176(C), pages 14-16.
    • Handle: RePEc:eee:ecolet:v:176:y:2019:i:c:p:14-16
    DOI: 10.1016/j.econlet.2018.12.021
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    References listed on IDEAS

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    1. Sergiu Hart & Ilan Kremer & Motty Perry, 2017. "Evidence Games: Truth and Commitment," American Economic Review, American Economic Association, vol. 107(3), pages 690-713, March.
    2. Grossman, Sanford J, 1981. "The Informational Role of Warranties and Private Disclosure about Product Quality," Journal of Law and Economics, University of Chicago Press, vol. 24(3), pages 461-483, December.
    3. Péter Eső & Ádám Galambos, 2013. "Disagreement and evidence production in strategic information transmission," International Journal of Game Theory, Springer;Game Theory Society, vol. 42(1), pages 263-282, February.
    4. Jeremy Bertomeu & Davide Cianciaruso, 2018. "Verifiable disclosure," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 65(4), pages 1011-1044, June.
    5. Crawford, Vincent P & Sobel, Joel, 1982. "Strategic Information Transmission," Econometrica, Econometric Society, vol. 50(6), pages 1431-1451, November.
    6. Paul R. Milgrom, 1981. "Good News and Bad News: Representation Theorems and Applications," Bell Journal of Economics, The RAND Corporation, vol. 12(2), pages 380-391, Autumn.
    7. Boyan Jovanovic, 1982. "Truthful Disclosure of Information," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 36-44, Spring.
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    More about this item

    Keywords

    Cheap-talk; Communication; Costly disclosure; Full revelation; Sender–receiver game; Verifiable information;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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