Endogenous ambiguity in cheap talk

Kellner, Christian and Le Quement, Mark T. (2018) Endogenous ambiguity in cheap talk. Journal of Economic Theory, 173. pp. 1-17. ISSN 0022-0531

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Abstract

This paper proposes a model of ambiguous language. We consider a simple cheap talk game in which a sender who faces an ambiguity averse receiver is able to perform ambiguous randomization, i.e. to randomize according to unknown probabilities. We show that for any standard influential communication equilibrium there exists an equilibrium featuring an ambiguous communication strategy which Pareto-dominates it in terms of consistent planning ex ante utilities. Ambiguity, by triggering worst-case decision-making by the receiver, shifts the latter's response to information towards the sender's ideal action, thus encouraging more information transmission.

Item Type: Article
Uncontrolled Keywords: cheap talk,ambiguity
Faculty \ School: Faculty of Social Sciences > School of Economics
Depositing User: Pure Connector
Date Deposited: 29 Sep 2017 05:06
Last Modified: 19 Aug 2020 23:56
URI: https://ueaeprints.uea.ac.uk/id/eprint/65002
DOI: 10.1016/j.jet.2017.10.007

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