Endogenous ambiguity and rational miscommunication

Suzuki, T

Endogenous ambiguity and rational miscommunication

Suzuki, T

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Publisher:: Elsevier
Publication Type:: Journal Article
Citation:: Journal of Economic Theory, 2023, 211, pp. 105686
Issue Date:: 2023-07-01

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Full metadata record

Field	Value	Language
dc.contributor.author	Suzuki, T https://orcid.org/0000-0003-1804-7416
dc.date.accessioned	2023-09-13T04:35:49Z
dc.date.available	2023-09-13T04:35:49Z
dc.date.issued	2023-07-01
dc.identifier.citation	Journal of Economic Theory, 2023, 211, pp. 105686
dc.identifier.issn	0022-0531
dc.identifier.issn	1095-7235
dc.identifier.uri	http://hdl.handle.net/10453/172075
dc.description.abstract	This paper studies a sender-receiver game in which both players want the receiver to choose the state-optimal action. Before observing the state, the sender observes a “contextual signal,” a payoff-irrelevant signal that correlates with states and is imperfectly shared with the receiver. Once the sender observes the state, the sender sends a message to the receiver, incurring a small messaging cost. It is shown that there is no miscommunication in any efficient equilibrium if the messaging cost is uniform or contextual information is poorly shared between players. However, if the messaging costs are different between some messages, and contextual information can affect the probability ranking of states and is shared reasonably well, any efficient equilibrium that favors the sender exhibits miscommunication. Furthermore, the messages that cause miscommunication can be coarse or ambiguous, depending on how well players share contextual information.
dc.language	en
dc.publisher	Elsevier
dc.relation.ispartof	Journal of Economic Theory
dc.relation.isbasedon	10.1016/j.jet.2023.105686
dc.rights	info:eu-repo/semantics/embargoedAccess
dc.subject	1401 Economic Theory, 1499 Other Economics
dc.subject.classification	Economic Theory
dc.subject.classification	3801 Applied economics
dc.subject.classification	3803 Economic theory
dc.title	Endogenous ambiguity and rational miscommunication
dc.type	Journal Article
utslib.citation.volume	211
utslib.for	1401 Economic Theory
utslib.for	1499 Other Economics
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Economics Discipline
utslib.copyright.status	embargoed	*
utslib.copyright.embargo	2025-07-01T00:00:00+1000Z
dc.date.updated	2023-09-13T04:35:48Z
pubs.publication-status	Published
pubs.volume	211

Abstract:

This paper studies a sender-receiver game in which both players want the receiver to choose the state-optimal action. Before observing the state, the sender observes a “contextual signal,” a payoff-irrelevant signal that correlates with states and is imperfectly shared with the receiver. Once the sender observes the state, the sender sends a message to the receiver, incurring a small messaging cost. It is shown that there is no miscommunication in any efficient equilibrium if the messaging cost is uniform or contextual information is poorly shared between players. However, if the messaging costs are different between some messages, and contextual information can affect the probability ranking of states and is shared reasonably well, any efficient equilibrium that favors the sender exhibits miscommunication. Furthermore, the messages that cause miscommunication can be coarse or ambiguous, depending on how well players share contextual information.

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10453/172075