Strategic information transmission
Abstract
This paper develops a model of strategic communication, in which a better-informed Sender (S) sends a possibly noisy signal to a Receiver (R), who then takes an action that determines the welfare of both. We characterize the set of Bayesian Nash equilibria under standard assumptions, and show that equilibrium signaling always takes a strikingly simple form, in which S partitions the support of the (scalar) variable that represents his private information and introduces noise into his signal by reporting, in effect, only which element of the partition his observation actually lies in. We show under further assumptions that before S observes his private information, the equilibrium whose partition has the greatest number of elements is Pareto-superior to all other equilibria, and that if agents coordinate on this equilibrium, R's equilibrium expected utility rises when agents' preferences become more similar. Since R bases his choice of action on rational expectations, this establishes a sense in which equilibrium signaling is more informative when agents' preferences are more similar.
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There can be no communication or transmission of information between an agent and a principal when their preferences toward a state of the world differ too much.
“First, there can be no communication or transmission of information between an agent and a principal when their preferences toward a state of the world differ too much.[9]”
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“Critically, penalties fall only on the recipient: if a submitted task includes a piece with a manipulated value, only the recipient receives a penalty while the sender remains unaffected (Crawford & Sobel, 1982).”
- Authors
- Crawford, V. P., & Sobel, J.
- Venue
- Econometrica
- Publisher
- JSTOR
- Published
- 1982-11
- Volume
- 50
- Issue
- 6
- Pages
- 1431
- ISSN
- 0012-9682 (ISSN-L)
- OpenAlex
- W2160003140
- Cited by
- 4,293
- References
- 0
- Citations by year
- 2026: 179 · 2025: 238 · 2024: 164 · 2023: 168 · 2022: 171 · 2021: 221 · 2020: 186 · 2019: 166 · 2018: 226 · 2017: 182 · 2016: 182 · 2015: 165 · 2014: 198 · 2013: 192 · 2012: 174
- FWCI
- 9.81
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- Econometrica (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Topics
- Social Sciences › Decision Sciences › Management Science and Operations Research › Game Theory and Applications
- Social Sciences › Decision Sciences › Management Science and Operations Research › Auction Theory and Applications
- Social Sciences › Safety Research › Experimental Behavioral Economics Studies
- Keywords
- strategic communication, signaling, Bayesian Nash equilibrium, information partitions, noisy signals, preference similarity, rational expectations
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