Co-ordination, Spillovers, and Cheap Talk

TitleCo-ordination, Spillovers, and Cheap Talk
Publication TypeJournal Article
Year of Publication2002
AuthorsBaliga S, Morris S
JournalJournal of Economic Theory
Pagination - 468
Date PublishedAugust 2002
ISBN Number0022-0531, 0022-0531
KeywordsAsymmetric and Private Information, Mechanism Design (D82), Equilibria, Equilibrium, Games, Information, Noncooperative Games (C72), Two Player
AbstractWe analyze the role of cheap-talk in two player games with one-sided incomplete information. We identify conditions under which (1) players can fully communicate and coordinate on efficient Nash equilibria of the underlying complete information game; and (2) players cannot communicate so cheap-talk does not alter the equilibrium set of the Bayesian game. We present examples that illustrate several issues that arise when there is two-sided incomplete information.