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Cheap-Talk Coordination of Entry by Privately Informed Firms

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  • In-Uck Park

Abstract

I analyze and compare the effects of sequential and simultaneous cheap-talk communication (e.g., preannouncement of entry) among privately informed potential entrants who then play a normal-form entry game. The first main result is that cheap-talk communication is powerful enough to enable the potential entrants to coordinate on an efficient outcome for each and every contingency. The second is that sequential cheap talk is more dextrous in this task in the sense that it can generate a greater variety of efficient outcomes than simultaneous cheap talk. The precise extent to which it does so is also explained.

Suggested Citation

  • In-Uck Park, 2002. "Cheap-Talk Coordination of Entry by Privately Informed Firms," RAND Journal of Economics, The RAND Corporation, vol. 33(3), pages 377-393, Autumn.
    • Handle: RePEc:rje:randje:v:33:y:2002:i:autumn:p:377-393
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    Cited by:

    1. Chirantan Ganguly & Indrajit Ray, 2023. "Information revelation and coordination using cheap talk in a game with two-sided private information," International Journal of Game Theory, Springer;Game Theory Society, vol. 52(4), pages 957-992, December.
    2. Debdatta Saha & Prabal Roy Chowdhury, 2018. "Coordination and Private Information Revelation," Games, MDPI, vol. 9(3), pages 1-21, September.
    3. Sutter, Matthias & Strassmair, Christina, 2009. "Communication, cooperation and collusion in team tournaments--An experimental study," Games and Economic Behavior, Elsevier, vol. 66(1), pages 506-525, May.
    4. Chirantan Ganguly & Indrajit Ray, 2013. "Information-Revelation and Coordination Using Cheap Talk in a Battle of the Sexes with Two-Sided Private Information," Discussion Papers 13-01r, Department of Economics, University of Birmingham.
    5. Chirantan Ganguly & Indrajit Ray, 2013. "Information-Revelation and Coordination Using Cheap Talk in a Battle of the Sexes with Two-Sided Private Information," Discussion Papers 13-01, Department of Economics, University of Birmingham.
    6. Ramakanta Patra & Tadashi Sekiguchi, 2021. "Full Collusion with Entry and Incomplete Information," KIER Working Papers 1055, Kyoto University, Institute of Economic Research.

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