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Communication games with optional verification

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  • Schopohl, Simon

    (Center for Mathematical Economics, Bielefeld University)

Abstract

We consider a Sender-Receiver game in which the Sender can choose between sending a cheap-talk message, which is costless, but also not verified and a costly verified message. While the Sender knows the true state of the world, the Receiver does not have this information, but has to choose an action depending on the message he receives. The action then yields to some utility for Sender and Receiver. We only make a few assumptions about the utility functions of both players, so situations may arise where the Sender’s preferences are such that she sends a message trying to convince the Receiver about a certain state of the world, which is not the true one. In a finite setting we state conditions for full revelation, i.e. when the Receiver always learns the truth. Furthermore we describe the player’s behavior if only partial revelation is possible. For a continuous setting we show that additional conditions have to hold and that these do not hold for "smooth" preferences and utility, e.g. in the classic example of quadratic loss utilities.

Suggested Citation

  • Schopohl, Simon, 2016. "Communication games with optional verification," Center for Mathematical Economics Working Papers 569, Center for Mathematical Economics, Bielefeld University.
  • Handle: RePEc:bie:wpaper:569
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    File URL: https://pub.uni-bielefeld.de/download/2907692/2907693
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    References listed on IDEAS

    as
    1. Dilip Mookherjee & Masatoshi Tsumagari, 2014. "Mechanism Design with Communication Constraints," Journal of Political Economy, University of Chicago Press, vol. 122(5), pages 1094-1129.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    cheap-talk; communication; costly disclosure; full revelation; increasing differences; 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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