Co-ordination, spillovers, and cheap talk

Sandeep Baliga, Stephen Morris

Research output: Contribution to journalArticle

37 Scopus citations

Abstract

We analyze the role of cheap-talk in two player games with one-sided incomplete information. We identify conditions under which (1) players can fully communicate and coordinate on efficient Nash equilibria of the underlying complete information game; and (2) players cannot communicate so cheap-talk does not alter the equilibrium set of the Bayesian game. We present examples that illustrate several issues that arise when there is two-sided incomplete information. Journal of Economic Literature Classification Numbers: C72, D82.

Original languageEnglish (US)
Pages (from-to)450-468
Number of pages19
JournalJournal of Economic Theory
Volume105
Issue number2
DOIs
StatePublished - Aug 2002

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

Keywords

  • Bayesian equilibrium
  • Cheap talk
  • Incomplete information
  • Nash equilibrium

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