A Role for Cheap Talk in Disclosure
44 Pages Posted: 7 Sep 2022 Last revised: 18 Oct 2022
Date Written: September 7, 2022
Abstract
This paper studies a one-sender-one-receiver disclosure game with general receiver preferences and message structures. Drawing on techniques from information design, I provide a characterization of the Perfect Bayesian Equilibrium outcomes. I find that any PBE can be interpreted as a combination of cheap talk equilibria in a partitional form. I revisit Milgrom (1981, 2008) and identify conditions for the classic unraveling result. I provide an algorithm to construct a PBE in games with linear disclosure structure. In addition, I apply the theory to examples of labor markets and political campaigns. The theory explains why communication usually involves presentation of evidence and randomization over messages.
Keywords: Communication, Incomplete information, disclosure, cheap talk, Information design
JEL Classification: C72, D82, D83
Suggested Citation: Suggested Citation