Cheap Talk with Transparent Motives

55 Pages Posted: 29 Mar 2017 Last revised: 7 Dec 2018

See all articles by Elliot Lipnowski

Elliot Lipnowski

University of Chicago - Department of Economics

Doron Ravid

University of Chicago - Department of Economics

Date Written: December 5, 2018

Abstract

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 garbling self-serving information. Using this observation, we examine the possibility of valuable communication, assess the value of commitment, and explicitly solve for sender-optimal equilibria in several examples. A key result is a geometric characterization of the value of cheap talk, described by the quasiconcave envelope of the sender’s value function.

Keywords: cheap talk, belief-based approach, securability, quasiconcave envelope, persuasion, information transmission, information design

JEL Classification: D83, D82, M37, D86, D72

Suggested Citation

Lipnowski, Elliot and Ravid, Doron, Cheap Talk with Transparent Motives (December 5, 2018). Available at SSRN: https://ssrn.com/abstract=2941601 or http://dx.doi.org/10.2139/ssrn.2941601

Elliot Lipnowski (Contact Author)

University of Chicago - Department of Economics ( email )

1126 E. 59th St
Chicago, IL 60637
United States

Doron Ravid

University of Chicago - Department of Economics ( email )

1126 E. 59th St
Chicago, IL 60637
United States

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