The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Cheap Talk

  • Vijay Krishna
  • John Morgan
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_2525

Abstract

Cheap-talk models address the question of how much information can be credibly transmitted when communication is direct and costless. When a single informed expert, who is biased, gives advice to a decision maker, only noisy information can be credibly transmitted. The more biased the expert is, the noisier the information. The decision maker can improve information transmission by: (a) more extensive communication, (b) soliciting advice from additional experts, or (c) writing contracts with the expert.

Keywords

Cheap talk Communication equilibria Delegation principle Games with incomplete information Incentive contracts Revelation principle Signalling 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Vijay Krishna
    • 1
  • John Morgan
    • 1
  1. 1.