Research Details

Abstract

This paper provides a refinement that uniquely selects the ex-ante Pareto dominant equilibrium in a cheap talk game. The reÖnement works by embedding any cheap talk game into a class of two-stage games where: in stage 1 sender and receiver choose their biases at a cost, and in stage 2 the cheap talk game is played. For such games, we show that a forward induction logic can be invoked to select the ex-ante Pareto-dominant equilibrium in the second stage. Games with fixed biases (the conventional cheap talk games) are then treated as limiting cases of this larger class of games.

Type

Article

Author(s)

Nemanja Antic, Nicola Persico

Date Published

2023

Citations

Antic, Nemanja, and Nicola Persico. 2023. Equilibrium Selection Through Forward Induction in Cheap Talk Games.