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.
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Krishna, V., Morgan, J. (2018). Cheap Talk. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2525
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DOI: https://doi.org/10.1057/978-1-349-95189-5_2525
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