Toxic Types and Infectious Communication Breakdown

We introduce a new channel for breakdown of cheap talk communication between an informed sender and an uninformed receiver. Our framework has the following novel feature: conditional on interacting, both parties agree on the optimal action in each state, but there are sender types with which the rec...

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Bibliographic Details
Published inIDEAS Working Paper Series from RePEc
Main Authors Eliaz, Kfir, Frug, Alexander
Format Paper
LanguageEnglish
Published St. Louis Federal Reserve Bank of St. Louis 01.01.2020
Subjects
Communication
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Summary:We introduce a new channel for breakdown of cheap talk communication between an informed sender and an uninformed receiver. Our framework has the following novel feature: conditional on interacting, both parties agree on the optimal action in each state, but there are sender types with which the receiver prefers not to interact. We show that for a broad class of preferences, any interval equilibrium induces only finitely many actions in the support of the receiver's strategy. We also show that introducing a second stage with noisy signals on the sender type has a dramatic effect on the first-stage communication.