Econometrica Vol. 76 No. 1 2008
Selecting Cheap-Talk Equilibria
Abstract
There are typically multiple equilibrium outcomes in the Crawford–Sobel (CS) model of strategic information transmission. This paper identifies a simple condition on equilibrium payoffs, called NITS (no incentive to separate), that selects among CS equilibria. Under a commonly used regularity condition, only the equilibrium with the maximal number of induced actions satisfies NITS. We discuss various justifications for NITS, including perturbed cheap-talk games with nonstrategic players or costly lying. We also apply NITS to other models of cheap talk, illustrating its potential beyond the CS framework.
- DOI
- 10.1111/j.0012-9682.2008.00819.x
- Volume
- 76
- Issue
- 1
- Pages
- 117-136
- Language
- en
- Sources
- bibtex:phds-export.bib crossref openalex