Cheap Talk with Transparent Motives
55 Pages Posted: 29 Mar 2017 Last revised: 5 Apr 2019
Date Written: December 5, 2018
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
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