Selecting cheap-talk equilibria
Selecting cheap-talk equilibria
There are typically multiple equilibrium outcomes in the Crawford–Sobel (CS) model of strategic information transmission. This paper identifies a simple condition on equilibrium payoffs, called NITS (no incentive to separate), that selects among CS equilibria. Under a commonly used regularity condition, only the equilibrium with the maximal number of induced actions satisfies NITS. We discuss various justifications for NITS, including perturbed cheap-talk games with nonstrategic players or costly lying. We also apply NITS to other models of cheap talk, illustrating its potential beyond the CS framework.
cheap talk, babbling, equilibrium selection, almost-cheap talk
117-136
Chen, Ying
338aa31f-c129-49c9-b5b7-b583836a8cc1
Kartik, Navin
5740dec2-7347-40dd-920d-42cdc1fd7636
Sobel, Joel
35aec069-bfa9-4310-8ea1-d5c6ec78aae9
January 2008
Chen, Ying
338aa31f-c129-49c9-b5b7-b583836a8cc1
Kartik, Navin
5740dec2-7347-40dd-920d-42cdc1fd7636
Sobel, Joel
35aec069-bfa9-4310-8ea1-d5c6ec78aae9
Abstract
There are typically multiple equilibrium outcomes in the Crawford–Sobel (CS) model of strategic information transmission. This paper identifies a simple condition on equilibrium payoffs, called NITS (no incentive to separate), that selects among CS equilibria. Under a commonly used regularity condition, only the equilibrium with the maximal number of induced actions satisfies NITS. We discuss various justifications for NITS, including perturbed cheap-talk games with nonstrategic players or costly lying. We also apply NITS to other models of cheap talk, illustrating its potential beyond the CS framework.
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Published date: January 2008
Keywords:
cheap talk, babbling, equilibrium selection, almost-cheap talk
Organisations:
Economics
Identifiers
Local EPrints ID: 353790
URI: http://eprints.soton.ac.uk/id/eprint/353790
ISSN: 0012-9682
PURE UUID: a756e3fc-428e-4c05-bebf-60817d79eec7
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Date deposited: 18 Jun 2013 09:15
Last modified: 14 Mar 2024 14:10
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Contributors
Author:
Ying Chen
Author:
Navin Kartik
Author:
Joel Sobel
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