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Disclosure Games with Large Evidence Spaces

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  • Shaofei Jiang

Abstract

We study a disclosure game with a large evidence space. There is an unknown binary state. A sender observes a sequence of binary signals about the state and discloses a left truncation of the sequence to a receiver in order to convince him that the state is good. We focus on truth-leaning equilibria (cf. Hart et al. (2017)), where the sender discloses truthfully when doing so is optimal, and the receiver takes off-path disclosure at face value. In equilibrium, seemingly sub-optimal truncations are disclosed, and the disclosure contains the longest truncation that yields the maximal difference between the number of good and bad signals. We also study a general framework of disclosure games which is compatible with large evidence spaces, a wide range of disclosure technologies, and finitely many states. We characterize the unique equilibrium value function of the sender and propose a method to construct equilibria for a broad class of games.

Suggested Citation

  • Shaofei Jiang, 2019. "Disclosure Games with Large Evidence Spaces," Papers 1910.13633, arXiv.org, revised Dec 2020.
  • Handle: RePEc:arx:papers:1910.13633
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    References listed on IDEAS

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    3. 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.
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    8. Hyun Song Shin, 2003. "Disclosures and Asset Returns," Econometrica, Econometric Society, vol. 71(1), pages 105-133, January.
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