Hierarchical Cheap Talk

Theoretical Economics 8 (1), 233-261, 2013

29 Pages Posted: 14 Feb 2018

See all articles by Attila Ambrus

Attila Ambrus

Duke University - Department of Economics

Eduardo M. Azevedo

University of Pennsylvania - The Wharton School

Yuichiro Kamada

University of California, Berkeley - Haas School of Business

Date Written: January 2013

Abstract

We investigate situations in which agents can communicate to each other only through a chain of intermediators, for example, because they have to obey institutionalized communication protocols. We assume that all involved in the communication are strategic and might want to influence the action taken by the final receiver. The set of pure strategy equilibrium outcomes is simple to characterize, is monotonic in each intermediator’s bias, and does not depend on the order of intermediators; intermediation in these equilibria cannot improve information transmission. However, none of these conclusions holds for mixed equilibria. We provide a partial characterization of mixed equilibria, and offer an economically relevant sufficient condition for every equilibrium to be outcome-equivalent to a pure equilibrium and hence for the simple characterization and comparative statics results to hold for the set of all equilibria.

Keywords: Cheap Talk, Intermediation, Communication Protocols

JEL Classification: C72, D82, D83

Suggested Citation

Ambrus, Attila and Azevedo, Eduardo M. and Kamada, Yuichiro, Hierarchical Cheap Talk (January 2013). Theoretical Economics 8 (1), 233-261, 2013. Available at SSRN: https://ssrn.com/abstract=3109127

Attila Ambrus

Duke University - Department of Economics ( email )

100 Fuqua Drive
Durham, NC 27708-0204
United States

Eduardo M. Azevedo (Contact Author)

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

HOME PAGE: http://www.eduardoMazevedo.com

Yuichiro Kamada

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

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