Receiver's Sensitivity and Strategic Information Transmission in Multi-sender Cheap Talk

Abstract

This study examines how sensitivity, which is defined as the degree to which a decision maker (DM) incorporates experts' opinions into his/her own decision-making, affects the precision of communication with experts when communication is strategic. We develop a simple cheap talk model comprising one DM and K experts, whose preference over the DM's decision is their private information. We demonstrate that the precision of communication with one expert monotonously increases in sensitivity to his/her opinion. We also demonstrate that the cross effect of sensitivity to one expert's opinion on the precision of communication with the other expert is not necessarily negative and is dependent on the heterogeneity in type distributions of all experts and the sensitivities to all experts' opinions. Finally, we demonstrate that the DM's expected payoff is improved by the DM's commitment toward being more sensitive to the opinion of the expert whose preference is expected to be moderate among the experts and that it is more likely to be beneficial when the other experts are expected to be greatly divided on what decision should be made.