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Cheap Talk With Transparent Motives
Author(s) -
Lipnowski Elliot,
Ravid Doron
Publication year - 2020
Publication title -
econometrica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 16.7
H-Index - 199
eISSN - 1468-0262
pISSN - 0012-9682
DOI - 10.3982/ecta15674
Subject(s) - communication source , credibility , cheap talk , key (lock) , value (mathematics) , function (biology) , computer science , mathematical economics , envelope (radar) , microeconomics , economics , computer security , telecommunications , political science , machine learning , evolutionary biology , law , biology , radar
We study a model of cheap talk with one substantive assumption: The sender's preferences are state independent. Our main observation is that such a sender gains credibility by degrading self‐serving information. Using this observation, we examine the sender's benefits from communication, assess the value of commitment, and explicitly solve for sender‐optimal equilibria in three examples. A key result is a geometric characterization of the value of cheap talk, described by the quasi concave envelope of the sender's value function.