Economic Theory Bulletin

, Volume 4, Issue 1, pp 61–72 | Cite as

Cheap talk with an informed receiver

Research Article

Abstract

This paper considers a model of strategic information transmission with an imperfectly informed receiver and provides a simple logic by which the receiver’s prior knowledge becomes an impediment to efficient communication. We show that the extent of communication is severely limited as the receiver becomes more informed. Moreover, in a simple example with two signals, we show that no information can be conveyed via cheap talk for an arbitrarily small degree of preference incongruence. This result draws sharp contrast to the case with an uninformed receiver which always yields a fully separating equilibrium as long as the preferences are sufficiently congruent.

Keywords

Cheap talk Informed receiver Information gap Preference congruence 

JEL Classification

D23 D82 

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Copyright information

© Society for the Advancement of Economic Theory 2015

Authors and Affiliations

  1. 1.Institute of Social and Economic ResearchOsaka UniversityOsakaJapan
  2. 2.Graduate School of EconomicsKobe UniversityKobeJapan

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