Significant difference between response to real and hypothetical valuation questions is often referred to as hypothetical bias. The existence of hypothetical bias has been well documented in both experimental and field settings, but there is little consensus on how to systematically control for it. Cummings and Taylor have had success with using "cheap talk" (which entails reading a script that...

Several conceptual points are made concerning communication in games of asymmetric information. Equilibrium refinements of Sender-Receiver cheap-talk games that are based on the concept of a putative equilibrium, and which rely on the presence of a rich language with literal meanings, are discussed. Three nested criteria are proposed: strong announcement-proofness, announcement-proofness, and w...

When are comparative statements credible? We show that simple complementarity conditions ensure that an expert with private information about multiple issues can credibly rank the issues for a decision maker. By restricting the expert’s ability to exaggerate, multidimensional cheap talk of this form permits communicationwhen it would not be credible in a single dimension. The communication gain...

Can comparative statements be credible even when absolute statements are not? For instance, can a professor credibly rank different students for a prospective employer even if she has an incentive to exaggerate the merits of each student? Or can an analyst credibly rank different stocks even if the client would be dubious about a recommendation to buy any one of them? We examine such problems i...

We consider the credibility, persuasiveness, and informativeness of multidimensional cheap talk by an expert to a decision maker. We find that an expert with state-independent preferences can always make credible comparative statements that trade off the expert’s incentive to exaggerate on each dimension. Such communication benefits the expert – cheap talk is “persuasive” – if her preferences a...

We investigate situations in which agents can only communicate to each other 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,...

We consider a cheap-talk game with one sender and one receiver. If the receiver does not commit to listen to only one message, the equilibrium refinements due to Farrell [5], Grossman and Perry [7] and Matthews, OkunoFujiwara and Postlewaite [11] are no longer applicable. We discuss different notions of durability and sequential credibility when a message can later be followed by more messages,...

This paper studies a competitive cheap talk model with two senders. Each sender, who is responsible for a single project, only observes the return of his own project. Exactly one project will be implemented. Both senders share some common interests with the receiver, but at the same time have own project biases. Under simultaneous communication, all equilibria are shown to be partition equilibr...

In this paper we extend the cheap talk model of Crawford and Sobel (1982) to a multidimensional state space and policy space. We provide a characterization of equilibria. We focus on the question of feasibility of information transmission, for large degrees of conflict of interests between the sender and the receiver. We show that it is possible to construct equilibria with information transmis...