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Dynamic Strategic Information Transmission

Authors: Skreta, Vasiliki
Golosov, Mikhail
Tsyvinski, Aleh
Wilson, Andrea
Keywords: asymmetric information;cheap talk;dynamic strategic communication;full information revelation
Issue Date: 21-Sep-2011
Abstract: This paper studies strategic information transmission in a finite horizon environment where, each period, a privately informed expert sends a message and a decision maker takes an action. Our main contribution is to show that communication in this dynamic environment is drastically different from the canonical static environment. First, full revelation is possible. We provide a con- structive method to build such an equilibrium. Second, we show that complicated communication, where far-away types pool, allows dynamic manipulation of beliefs and enables better information release in the future. If communication is restricted to be simple, such as monotonic partitional, full revelation is impossible. Thirdly, we show that conditioning future information release on past actions improves incentives and information release.
Rights: Copyright Vasiliki Skreta, Mikhail Golosov, Aleh Tsyvinski and Andrea Wilson, 2011.
Appears in Collections:Economics Working Papers

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