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Journal of Economic Theory and Econometrics
Journal of the Korean Econometric Society
A Note on Reputation in Noisy Cheap Talk
Vol.33, No.3, September 2022, 11–32
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Yong-Ju Lee
(Yeungnam University)
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Abstract
We revisit Morris (2001) two-period advice game but with communication
error, and investigate how communication error affects the advisor’s
reputational incentives and thus her information transmission. Reputational incentives
differ from Morris (2001) and critically depend on the structure of noise
and specific equilibrium strategies. We borrow the notion of “plausible deniability”
by Blume et al. (2019) and explain the effects of communication error on
information transmission and welfare. We show that the weakened reputational
incentives reduce the good type advisor’s incentive to lie, compared to Morris
(2001).
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Keywords
Advice Game, Cheap Talk, Reputation, Communication Error, Plausible Deniability |
JEL classification codes
C72, D82, D83 |
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