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Information Transmission in Nested Sender-Receiver Games

Author

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  • Ying Chen

    (Key Laboratory of Inorganic Functional Materials and Devices - Shanghai Institute of Ceramics - CAS - Chinese Academy of Sciences [Beijing])

  • Sidartha Gordon

    (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique)

Abstract

We introduce a "nestedness" relation for a general class of sender-receiver games and compare equilibrium properties, in particular the amount of information transmitted, across games that are nested. Roughly, game is nested in game if the players's optimal actions are closer in game. We show that under some conditions, more information is transmitted in the nested game in the sense that the receiver's expected equilibrium payoff is higher. The results generalize the comparative statics and welfare comparisons with respect to preferences in the seminal paper of Crawford and Sobel (1982). We also derive new results with respect to changes in priors in addition to changes in preferences. We illustrate the usefulness of the results in three applications: (i) delegation to an intermediary with a different prior, the choice between centralization and delegation, and two-way communication with an informed principal.

Suggested Citation

  • Ying Chen & Sidartha Gordon, 2014. "Information Transmission in Nested Sender-Receiver Games," Working Papers hal-00973071, HAL.
    • Handle: RePEc:hal:wpaper:hal-00973071
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-00973071
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    References listed on IDEAS

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    Cited by:

    1. Catonini, Emiliano & Stepanov, Sergey, 2023. "Reputation and information aggregation," Journal of Economic Behavior & Organization, Elsevier, vol. 208(C), pages 156-173.
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    3. Gordon Rausser & Leo Simon & Jinhua Zhao, 2015. "Rational exaggeration and counter-exaggeration in information aggregation games," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 59(1), pages 109-146, May.
    4. Bilancini, Ennio & Boncinelli, Leonardo, 2018. "Signaling with costly acquisition of signals," Journal of Economic Behavior & Organization, Elsevier, vol. 145(C), pages 141-150.
    5. Frug, Alexander, 2016. "A note on optimal cheap talk equilibria in a discrete state space," Games and Economic Behavior, Elsevier, vol. 99(C), pages 180-185.
    6. Dilmé, Francesc, 2022. "Strategic communication with a small conflict of interest," Games and Economic Behavior, Elsevier, vol. 134(C), pages 1-19.
    7. Kellner, Christian & Le Quement, Mark T., 2018. "Endogenous ambiguity in cheap talk," Journal of Economic Theory, Elsevier, vol. 173(C), pages 1-17.
    8. Oded Berman & Mohammad M. Fazel-Zarandi & Dmitry Krass, 2019. "Truthful Cheap Talk: Why Operational Flexibility May Lead to Truthful Communication," Management Science, INFORMS, vol. 65(4), pages 1624-1641, April.

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    More about this item

    Keywords

    sender-receiver games; information transmission; nestedness; inter- mediary; delegation; informed principal.;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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