Meaningful cheap talk must improve equilibrium payoffs

Lanny Arvan, Luís Cabral, Vasco Santos

Research output: Contribution to journalArticle

5 Citations (Scopus)

Abstract

We generalize idea of coordination by means of cheap talk. We show that if cheap talk is meaningful (in the sense that babbling equilibria are ruled out) and if there is room for cooperation (namely if there exists at least one pure-strategy equilibrium Pareto superior to the default equilibrium), then cheap talk must increase the equilibrium expected payoff relative to the play of the game without preplay communication. The result is limited to proper equilibria of the communication game and to games with two players. It is shown that.

Original languageEnglish
Pages (from-to)97-106
Number of pages10
JournalMathematical social sciences
Volume37
Issue number1
DOIs
Publication statusPublished - 1 Jan 1999

Keywords

  • Cheap talk
  • Communication
  • Equilibrium

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