Template-Type: ReDIF-Paper 1.0
Title: Information Design in Cheap Talk
Author-Name: Qianjun Lyu
Author-Email: qlyu@uni-bonn.de
Author-Name: Wing Suen
Author-Email:
Classification-JEL: D82, D83
Keywords: marginal incentives, common interest, concave envelope, quasiconcave envelope, double randomization

Abstract: An uninformed sender publicly commits to an informative experiment about an
uncertain state, privately observes its outcome, and sends a cheap-talk message to
a receiver. We provide an algorithm valid for arbitrary state-dependent preferences
that will determine the sender’s optimal experiment and his equilibrium payoff
under binary state space. We give sufficient conditions for information design to
be valuable or not under different payoff structures. These conditions depend more
on marginal incentives - how payoffs vary with the state - than on the alignment
of sender’s and receiver’s rankings over actions within a state. The algorithm can
be easily modified to study canonical cheap talk games with a perfectly informed
sender.


Note: 
Length: 44
Creation-Date: 2023-10
Revision-Date:
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp470
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2023_470