Valuable Cheap Talk and Equilibrium Selection

Equilibrium selection in experimental cheap talk games

In the past, many refinements have been proposed to select equilibria in cheap talk games. Usually, these refinements were motivated by a discussion of how rational agents would reason in some particular cheap talk games. In this paper, we propose a new refinement and stability measure that is intended to predict actual behavior in a wide range of cheap talk games. According to our Average Cred...

Equilibrium Selection in Cheap Talk Games: ACDC Rocks when Other Criteria Remain Silent

Information Transmission with Cheap and Almost-Cheap Talk∗

Communication in practice typically occurs through multiple channels, not all of which permit costless misrepresentation of private information. Accordingly, I study a model of strategic information transmission based on Crawford and Sobel (1982), but allow for communication through both cheap talk and messages on a second dimension where misreporting is costly. Using a forward-induction refine...

Coordination and Cheap Talk in a Battle of the Sexes with Private Information

We consider a Battle of the Sexes game with incomplete information and allow cheap talk regarding players’ private information before the game is played. We prove that the unique fully revealing symmetric cheap talk equilibrium has a desirable coordination property. Such coordination can also be obtained as a partially revealing cheap talk equilibrium. These outcomes can also be achieved using ...

Cheap Talk, Neologisms, and Bargaining

This paper shows that in some bargaining games, cheap talk must matter: the unique neologism-proof equilibrium involves informative talk. A simple tradeoff makes both equilibrium talk and neologisms credible: by saying that he is interested in trading, the buyer encourages the seller to continue to bargain but receives poorer terms of trade if trade occurs. All tj^pes of both parties are (weakl...