IDEAS home Printed from https://ideas.repec.org/p/brd/wpaper/135.html
   My bibliography  Save this paper

Bayesian Doublespeak

Author

Listed:
  • Ing-Haw Cheng

    (University of Toronto)

  • Alice Hsiaw

    (Brandeis University)

Abstract

We show that misinformation distorts long-run beliefs in “doublespeak’’ equilibria of a cheap talk game where receivers are uncertain of a state and the sender’s type. A sender type who prefers receivers take wrong actions sends messages that plausibly come from a good type under a different state. Even after observing infinite messages, receivers disagree about the state and take different ex-post actions. A policymaker who believes that doublespeak would mislead receivers may restrict the sender to finite messages. An option for receivers to fact-check messages does not limit doublespeak, but sender concerns about reputation can.

Suggested Citation

  • Ing-Haw Cheng & Alice Hsiaw, 2023. "Bayesian Doublespeak," Working Papers 135, Brandeis University, Department of Economics and International Business School.
    • Handle: RePEc:brd:wpaper:135
    as

    Download full text from publisher

    File URL: http://www.brandeis.edu/economics/nePEc/brd/doc/brandeis_wp135.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Hwang, Byoung-Hyoun & Kim, Seoyoung, 2009. "It pays to have friends," Journal of Financial Economics, Elsevier, vol. 93(1), pages 138-158, July.
    2. Michael C. Jensen, 2010. "The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems," Journal of Applied Corporate Finance, Morgan Stanley, vol. 22(1), pages 43-58, January.
    3. , & , & ,, 2016. "Fragility of asymptotic agreement under Bayesian learning," Theoretical Economics, Econometric Society, vol. 11(1), January.
    4. T Renee Bowen & Danil Dmitriev & Simone Galperti, 2023. "Learning from Shared News: When Abundant Information Leads to Belief Polarization," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 138(2), pages 955-1000.
    5. Roland Benabou & Guy Laroque, 1992. "Using Privileged Information to Manipulate Markets: Insiders, Gurus, and Credibility," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(3), pages 921-958.
    6. Roland G FryerJr & Philipp Harms & Matthew O Jackson, 2019. "Updating Beliefs when Evidence is Open to Interpretation: Implications for Bias and Polarization," Journal of the European Economic Association, European Economic Association, vol. 17(5), pages 1470-1501.
    7. Del Guercio, Diane & Seery, Laura & Woidtke, Tracie, 2008. "Do boards pay attention when institutional investor activists "just vote no"?," Journal of Financial Economics, Elsevier, vol. 90(1), pages 84-103, October.
    8. Hermalin, Benjamin E & Weisbach, Michael S, 1998. "Endogenously Chosen Boards of Directors and Their Monitoring of the CEO," American Economic Review, American Economic Association, vol. 88(1), pages 96-118, March.
    9. Brendan Nyhan, 2020. "Facts and Myths about Misperceptions," Journal of Economic Perspectives, American Economic Association, vol. 34(3), pages 220-236, Summer.
    10. Matthew Rabin & Joel L. Schrag, 1999. "First Impressions Matter: A Model of Confirmatory Bias," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(1), pages 37-82.
    11. J. Aislinn Bohren & Daniel N. Hauser, 2021. "Learning With Heterogeneous Misspecified Models: Characterization and Robustness," Econometrica, Econometric Society, vol. 89(6), pages 3025-3077, November.
    12. Bohren, Aislinn & Hauser, Daniel, 2017. "Learning with Heterogeneous Misspecified Models: Characterization and Robustness," CEPR Discussion Papers 12036, C.E.P.R. Discussion Papers.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Le Yaouanq, Yves, 2023. "A model of voting with motivated beliefs," Journal of Economic Behavior & Organization, Elsevier, vol. 213(C), pages 394-408.
    2. Chen, Jaden Yang, 2022. "Biased learning under ambiguous information," Journal of Economic Theory, Elsevier, vol. 203(C).
    3. Renee B. Adams & Benjamin E. Hermalin & Michael S. Weisbach, 2010. "The Role of Boards of Directors in Corporate Governance: A Conceptual Framework and Survey," Journal of Economic Literature, American Economic Association, vol. 48(1), pages 58-107, March.
    4. Cheng, Ing-Haw & Hsiaw, Alice, 2022. "Distrust in experts and the origins of disagreement," Journal of Economic Theory, Elsevier, vol. 200(C).
    5. Balsam, Steven & Kwack, So Yean & Lee, Jae Young, 2017. "Network connections, CEO compensation and involuntary turnover: The impact of a friend of a friend," Journal of Corporate Finance, Elsevier, vol. 45(C), pages 220-244.
    6. Gagnon-Bartsch, Tristan & Bushong, Benjamin, 2022. "Learning with misattribution of reference dependence," Journal of Economic Theory, Elsevier, vol. 203(C).
    7. Kuang, Yu Flora & Lee, Gladys, 2017. "Corporate fraud and external social connectedness of independent directors," Journal of Corporate Finance, Elsevier, vol. 45(C), pages 401-427.
    8. Matteo P. Arena & Michaël Dewally & Sarah W. Peck, 2020. "Fight or flee: Outside director departures prior to contested management buyout offers," Corporate Governance: An International Review, Wiley Blackwell, vol. 28(5), pages 274-293, September.
    9. Chih-Liang Liu & Junmao Chiu, 2024. "External social networks and tax avoidance," Review of Quantitative Finance and Accounting, Springer, vol. 62(4), pages 1459-1504, May.
    10. Fudenberg, Drew & Gao, Ying & Pei, Harry, 2022. "A reputation for honesty," Journal of Economic Theory, Elsevier, vol. 204(C).
    11. Bouwman, Christa H. S., 2010. "Corporate Governance Propagation through Overlapping Directors," Working Papers 11-23, University of Pennsylvania, Wharton School, Weiss Center.
    12. Bhuyan, Md Nazmul Hasan & Okafor, Collins E. & Cho, Eunho, 2022. "Do friendly boards impact the value of real options?," Journal of Behavioral and Experimental Finance, Elsevier, vol. 33(C).
    13. Hui Liang James & Hongxia Wang, 2021. "Independent director tenure and dividends," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 48(5-6), pages 1057-1091, May.
    14. Ba, Cuimin & Gindin, Alice, 2023. "A multi-agent model of misspecified learning with overconfidence," Games and Economic Behavior, Elsevier, vol. 142(C), pages 315-338.
    15. Fudenberg, Drew & Lanzani, Giacomo & Strack, Philipp, 2023. "Pathwise concentration bounds for Bayesian beliefs," Theoretical Economics, Econometric Society, vol. 18(4), November.
    16. Fu, Fangjian & Lin, Leming & Officer, Micah S., 2013. "Acquisitions driven by stock overvaluation: Are they good deals?," Journal of Financial Economics, Elsevier, vol. 109(1), pages 24-39.
    17. Goergen, Marc & Manjon, Miguel C. & Renneboog, Luc, 2008. "Recent developments in German corporate governance," International Review of Law and Economics, Elsevier, vol. 28(3), pages 175-193, September.
    18. Brogi, Marina & Lagasio, Valentina, 2022. "Better safe than sorry. Bank corporate governance, risk-taking, and performance," Finance Research Letters, Elsevier, vol. 44(C).
    19. Wided Bouaine & Lanouar Charfeddine & Mohamed Arouri & Frédéric Teulon, 2014. "The influence of CEO departure type and board characteristics on firm performance," Working Papers 2014-87, Department of Research, Ipag Business School.
    20. Sandra Cavaco & Patricia Crifo & Antoine Rebérioux & Gwenael Roudaut, 2014. "Independent directors: less informed, but better selected? New evidence from a two-way director-firm fixed effect model," Working Papers hal-04141284, HAL.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:brd:wpaper:135. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Andrea Luna (email available below). General contact details of provider: https://edirc.repec.org/data/gsbraus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.