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arXiv · 2209.08494

Ambiguous Cheap Talk

Longjian Li
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Abstract

This paper explores how ambiguity affects communication. We consider a cheap talk model in which the receiver evaluates the sender's message with respect to its worst-case expected payoff generated by multiplier preferences. We characterize the receiver's optimal strategy and show that the receiver's posterior action is consistent with his ex-ante action. We find that in some situations, ambiguity improves communication by shifting the receiver's optimal action upwards, and these situations are not rare.

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Longjian Li. 2022-09-18. Ambiguous Cheap Talk. https://arxiv.org/abs/2209.08494

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