scholarly journals Cheap Talk With Endogenous Conflict of Interest

Econometrica ◽  
2020 ◽  
Vol 88 (6) ◽  
pp. 2663-2695
Author(s):  
Nemanja Antic ◽  
Nicola Persico
Keyword(s):  
Information Transmission ◽  
Conflict Of Interest ◽  
Competitive Equilibrium ◽  
Cheap Talk ◽  
Competitive Market ◽  
Principal Agent ◽  
Functional Forms ◽  
Inverse Demand

In a cheap‐talk setting where the conflict of interest between sender and receiver is determined endogenously by the choice of parameters θ i for each agent i, conditions are provided that determine the sign of each agent's inverse demand for θ without assuming that the most informative equilibrium will necessarily be played in the cheap talk game. For two popular functional forms of payoffs, we derive analytically tractable approximations for agent i's demand for θ. In an application where the θi's are purchased on a competitive market, we provide conditions for a competitive equilibrium to feature maximal information transmission. In a principal–agent application where the agent's θ is set by the principal, our results show that information transmission will be partial. We consider extensions where: (1) the θ's are acquired covertly rather than overtly and (2) the θ's are traded after the sender has received the information.

scholarly journals Cheap Talk and Editorial Control

2014 ◽  
Vol 14 (1) ◽  
pp. 1-25 ◽  
Author(s):  
Jonathan Newton
Keyword(s):  
Information Transmission ◽  
Sufficient Conditions ◽  
Cheap Talk ◽  
Necessary And Sufficient Conditions ◽  
Necessary And Sufficient ◽  
Simple Models

AbstractThis paper analyzes simple models of editorial control. Starting from the framework developed by Krishna and Morgan (2001a), we analyze two-sender models of cheap talk where one or more of the senders has the power to veto messages before they reach the receiver. A characterization of the most informative equilibria of such models is given. It is shown that editorial control never aids communication and that for small biases in the senders’ preferences relative to those of the receiver, necessary and sufficient conditions for information transmission to be adversely affected are (i) that the senders have opposed preferences relative to the receiver and (ii) that both senders have powers of editorial control. It is shown that the addition of further senders beyond two weakly decreases information transmission when senders exercising editorial control are anonymous, and weakly increases information transmission when senders exercising editorial control are observed.

scholarly journals MULTISTAGE COMMUNICATION WITH AND WITHOUT VERIFIABLE TYPES

2008 ◽  
Vol 10 (02) ◽  
pp. 145-164 ◽  
Author(s):  
FRÉDÉRIC KOESSLER ◽  
FRANÇOISE FORGES
Keyword(s):  
Information Transmission ◽  
Decision Maker ◽  
Cheap Talk ◽  
Strategic Information ◽  
Strategic Information Transmission ◽  
Bounded Number

We survey selected results on strategic information transmission. We distinguish between "cheap talk" and "persuasion". In the latter model, the informed player's message set depends on his type. As a benchmark, we first assume that the informed player sends a single message to the decision maker. We state characterization results for the sets of equilibrium payoffs, with and without verifiable types. We then show that multistage, bilateral communication enables the players to achieve new equilibrium outcomes, even if types are verifiable. We also propose complete characterizations of the equilibrium payoffs that are achievable with a bounded number of communication rounds.

scholarly journals Equilibrium Proofmaking

2001 ◽  
Vol 23 (4) ◽  
pp. 421-442 ◽  
Author(s):  
E. Roy Weintraub ◽  
Ted Gayer
Keyword(s):  
General Equilibrium ◽  
Competitive Equilibrium ◽  
Equilibrium Price ◽  
Competitive Market ◽  
Rite Of Passage ◽  
Price Vector ◽  
Market Clearing ◽  
History Of Economics ◽  
History Of ◽  
As If

Each year, new economics Ph.D. students learn the proof of the existence of a competitive equilibrium as if it were a rite of passage. From the utility-maximizing behavior of consumers and the profit-maximizing behavior of firms, neophyte economists soon can demonstrate that under certain conditions there exists a competitive market-clearing general equilibrium price vector. While there are a number of proofs that establish the existence of such an equilibrium, the validity of these proofs is indubitable. Indeed, economists with even scant knowledge of the history of economics can identify Kenneth J. Arrow and Gerard Debreu's Econometrica paper as having provided the proof that settled the issue.

scholarly journals Cheap Talk with Multiple Experts and Uncertain Biases

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Gülen Karakoç
Keyword(s):  
Decision Making ◽  
Information Transmission ◽  
Decision Maker ◽  
Private Information ◽  
Cheap Talk ◽  
Second Opinion ◽  
Choice Under Uncertainty ◽  
Multiple Experts

Abstract A decision maker solicits information from two partially informed experts and then makes a choice under uncertainty. The experts can be either moderately or extremely biased relative to the decision maker, which is their private information. I investigate the incentives of the experts to share their private information with the decision maker and analyze the resulting effects on information transmission. I show that it may be optimal to consult a single expert rather than two experts if the decision maker is sufficiently concerned about taking advice from extremely biased experts. In contrast to what may be expected, this result suggests that getting a second opinion may not always be helpful for decision making.

scholarly journals Corporate Governance: An Islamic Institution Perspective

2017 ◽  
Vol 1 (1) ◽  
pp. 29-32
Author(s):  
K. M. Anwarul Islam ◽  
Orobah Ali Barghouthi
Keyword(s):  
Corporate Governance ◽  
Board Of Directors ◽  
Conflict Of Interest ◽  
Financial System ◽  
Senior Management ◽  
Principal Agent ◽  
The Board Of Directors

This takes the paper into a discussion of some of the most crucial aspects of corporate governance, including its objectives, mechanisms and tools. One of the most important objectives is resolution of the principal/agent conflict of interest with a view to promote the interests of all stakeholders as well as the soundness and stability of the financial system. The most important mechanisms for this purpose are the Board of Directors, Senior Management, shareholders and depositors. The paper discusses the measures that need to be taken to make the Board and the Management more effective and accountable in the performance of their roles and to enable the shareholders and depositors to play a greater role in protecting their own interests. The paper then addresses some of the standard tools that are available for making the Board and the Management more effective and accountable.

Information Transmission under the Shadow of the Future: An Experiment

2020 ◽  
Vol 12 (4) ◽  
pp. 75-98 ◽  
Author(s):  
Alistair J. Wilson ◽  
Emanuel Vespa
Keyword(s):  
Information Transmission ◽  
Information Sharing ◽  
Cheap Talk ◽  
Coordination Failure ◽  
Equilibrium Outcome ◽  
The Future ◽  
Ongoing Relationship ◽  
Information Rent ◽  
The One

We experimentally examine how information transmission functions in an ongoing relationship. Where the one-shot cheap-talk literature documents substantial overcommunication and preferences for honesty, the outcomes in our repeated setting are more consistent with uninformative babbling outcomes. This is particularly surprising, as honest revelation is supportable as an equilibrium outcome in our repeated setting. We show that inefficient outcomes are driven by a coordination failure on how to distribute the gains from information sharing. However, when agents can coordinate on the payment of an “information rent,” honest revelation emerges. (JEL C92, D83)

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