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Unmediated communication in games with complete and incomplete information

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  • Gerardi, Dino

Abstract

In this paper we study the effects of adding unmediated communication to static, finite games of complete and incomplete information. We characterize S^{U}(G), the set of outcomes of a game G, that are induced by sequential equilibria of cheap talk extensions. A cheap talk extension of G is an extensive-form game in which players communicate before playing G. A reliable mediator is not available and players exchange private or public messages that do not affect directly their payoffs. We first show that if G is a game of complete information with five or more players and rational parameters, then S^{U}(G) coincides with the set of correlated equilibria of G. Next, we demonstrate that if G is a game of incomplete information with at least five players, rational parameters and full support (i.e. all profiles of types have positive probability), then S^{U}(G) is equal to the set of communication equilibria of G.
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  • Gerardi, Dino, 2004. "Unmediated communication in games with complete and incomplete information," Journal of Economic Theory, Elsevier, vol. 114(1), pages 104-131, January.
    • Handle: RePEc:eee:jetheo:v:114:y:2004:i:1:p:104-131
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    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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