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Optimal Use of Communication Resources

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Listed:
  • Olivier Gossner
  • Penelope Hernandez
  • Abraham Neyman

Abstract

We study a repeated game with asymmetric information about a dynamic state of nature. In the course of the game, the better informed player can communicate some or all of his information with the other. Our model covers costly and/or bounded communication. We characterize the set of equilibrium payoffs, and contrast these with the communication equilibrium payoffs, which by definition entail no communication costs.

Suggested Citation

  • Olivier Gossner & Penelope Hernandez & Abraham Neyman, 2004. "Optimal Use of Communication Resources," Discussion Paper Series dp377, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
    • Handle: RePEc:huj:dispap:dp377
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    References listed on IDEAS

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    1. Forges, Francoise, 1990. "Universal Mechanisms," Econometrica, Econometric Society, vol. 58(6), pages 1341-1364, November.
    2. V.D. Divekar, 1972. "Communication," The Indian Economic & Social History Review, , vol. 9(2), pages 235-238, June.
    3. Forges, Francoise M, 1986. "An Approach to Communication Equilibria," Econometrica, Econometric Society, vol. 54(6), pages 1375-1385, November.
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    5. Ben-Porath, Elchanan, 2003. "Cheap talk in games with incomplete information," Journal of Economic Theory, Elsevier, vol. 108(1), pages 45-71, January.
    6. Gerardi, Dino, 2004. "Unmediated communication in games with complete and incomplete information," Journal of Economic Theory, Elsevier, vol. 114(1), pages 104-131, January.
    7. Arrow, Kenneth J, 1985. "Informational Structure of the Firm," American Economic Review, American Economic Association, vol. 75(2), pages 303-307, May.
    8. Radner, Roy, 1993. "The Organization of Decentralized Information Processing," Econometrica, Econometric Society, vol. 61(5), pages 1109-1146, September.
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    Citations

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    Cited by:

    1. Antonio Cabrales & Olivier Gossner & Roberto Serrano, 2013. "Entropy and the Value of Information for Investors," American Economic Review, American Economic Association, vol. 103(1), pages 360-377, February.
    2. Irene Valsecchi, 2013. "The expert problem: a survey," Economics of Governance, Springer, vol. 14(4), pages 303-331, November.
    3. Lindbeck, Assar & Weibull, Jörgen, 2020. "Delegation of investment decisions, and optimal remuneration of agents," European Economic Review, Elsevier, vol. 129(C).
    4. Simone Alfarano & Eva Camacho & Gabriele Tedeschi, 2019. "Alternative approaches for the reformulation of economics," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 14(1), pages 1-6, March.
    5. Dietrichson, Jens & Gudmundsson, Jens & Jochem, Torsten, 2022. "Why don’t we talk about it? Communication and coordination in teams," Journal of Economic Behavior & Organization, Elsevier, vol. 197(C), pages 257-278.
    6. Abraham Neyman, 2008. "Learning Effectiveness and Memory Size," Discussion Paper Series dp476, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
    7. Aurora García-Gallego & Penélope Hernández-Rojas & Amalia Rodrigo-González, 2013. "Endogenous vs. Exogenous Transmission of Information: An Experiment," Working Papers 2013/06, Economics Department, Universitat Jaume I, Castellón (Spain).
    8. Johanna Hertel & John Smith, 2013. "Not so cheap talk: costly and discrete communication," Theory and Decision, Springer, vol. 75(2), pages 267-291, August.
    9. Bavly, Gilad & Neyman, Abraham, 2014. "Online concealed correlation and bounded rationality," Games and Economic Behavior, Elsevier, vol. 88(C), pages 71-89.
    10. Dietrichson, Jens & Jochem, Torsten, 2014. "Organizational coordination and costly communication with boundedly rational agents," Comparative Institutional Analysis Working Paper Series 2014:1, Lund University, Comparative Institutional Analysis, School of Economics and Management.
    11. Le Treust, Maël & Tomala, Tristan, 2019. "Persuasion with limited communication capacity," Journal of Economic Theory, Elsevier, vol. 184(C).
    12. Olivier Gossner & Rida Laraki & Tristan Tomala, 2004. "Maxmin computation and optimal correlation in repeated games with signals," Working Papers hal-00242940, HAL.
    13. Hernández, Penélope & Urbano, Amparo, 2008. "Codification schemes and finite automata," Mathematical Social Sciences, Elsevier, vol. 56(3), pages 395-409, November.
    14. Aurora García-Gallego & Penelope Hernández-Rojas & Amalia Rodrigo-González, 2015. "An experimental online matching pennies game," Working Papers 2015/03, Economics Department, Universitat Jaume I, Castellón (Spain).
    15. Dietrichson, Jens & Gudmundsson, Jens & Jochem, Torsten, 2014. "Let's Talk It Over: Communication and Coordination in Teams," Working Papers 2014:2, Lund University, Department of Economics, revised 18 Apr 2018.
    16. Neyman, Abraham & Okada, Daijiro, 2009. "Growth of strategy sets, entropy, and nonstationary bounded recall," Games and Economic Behavior, Elsevier, vol. 66(1), pages 404-425, May.
    17. Abraham Neyman & Daijiro Okada, 2005. "Growth of Strategy Sets, Entropy, and Nonstationary Bounded Recall," Levine's Bibliography 122247000000000920, UCLA Department of Economics.
    18. Olivier Gossner & Penélope Hernández & Ron Peretz, 2016. "The complexity of interacting automata," International Journal of Game Theory, Springer;Game Theory Society, vol. 45(1), pages 461-496, March.

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    More about this item

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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