Cheap Talk, Neologisms, and Bargaining
نویسندگان
چکیده
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 (weakly) better off in the neologism-proof equilibrium than in the equilibrium without talk. Thus, cheap talk before bargaining will happen and is socially desirable. * Financial support through NSF grants IRI-8712238 (Farrell) and xxx-88xxxxx (Gibbons) is gratefully acknowledged.
منابع مشابه
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