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Effective communication in cheap talk games

Author

Listed:
  • Sidartha Gordon

    (LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique)

  • Navin Kartik

    (Columbia University [New York])

  • Melody Pei-Yu Lo

    (NTU - National Taïwan University)

  • Wojciech Olszewski

    (Northwestern University [Evanston])

  • Joel Sobel

    (UC - University of California)

Abstract

his paper presents arguments based on weak dominance and learning for selecting informative equilibria in a model of cheap-talk communication. The results also predict a monotonic relationship between messages and the actions they induce. We reformulate the communication game as one in which the strategy of the informed player is an interval partition of the type space instead of type-contingent messages. We show that in this game there is a largest (informally, most informative) equilibrium. The largest equilibrium in the reformulated game is the largest equilibrium that survives iterated deletion of weakly dominated strategies and that, under a standard regularity condition, this is the only equilibrium that survives deletion of weakly dominated strategies. We interpret these results in terms of learning. Our arguments establish that a class of adaptive dynamics converge to the largest equilibrium from a rich set of initial conditions.

Suggested Citation

  • Sidartha Gordon & Navin Kartik & Melody Pei-Yu Lo & Wojciech Olszewski & Joel Sobel, 2023. "Effective communication in cheap talk games," Working Papers hal-04243989, HAL.
    • Handle: RePEc:hal:wpaper:hal-04243989
    Note: View the original document on HAL open archive server: https://hal.science/hal-04243989v1
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