Abstract
We expand Crawford and Sobel’s (Econometrica 50(6):1431–1451, 1982) model of information transmission to allow for the costly provision of ‘hard evidence’ in addition to conventional cheap talk. Under mild assumptions we prove that equilibria have an interval-partition structure, where types of the Sender belonging to the same interval either all induce the same action through cheap talk or reveal their types through hard evidence. We also show that the availability of costly hard signals may reverse one of the important implications of the classical cheap talk model, namely, that diverging preferences always lead to less communication.
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