On Modeling Cheap Talk in Bayesian Games

Abstract

The “cheap talk games” studied in this chapter are games in which players with private information exchange payoff-irrelevant messages. (Crawford and Sobel (1982)) and (Green and Stokey (1980)) introduced the simplest cheap talk games, those in which a “sender” with private information sends a message to a “receiver,” who then takes an action. Equilibrium refinement criteria for sender-receiver games have been studied extensively,1 and variations of sender-receiver games have been used to model a variety of phenomena.2 Little work, however, has been done on more general cheap talk games. A few studies have considered multiple informed parties, but with only one round of pre-play communication.3 Even fewer studies have considered games with multiple rounds of communication, and then with only one informed party.4 KeywordsBelief FunctionCheap TalkEquilibrium PayoffSequential EquilibriumBAYESIAN GameThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.