Cheap Talk with Outside Options

When words are not enough

“…Interestingly, our equilibrium characterization results from Propositions 2 -6 also hold qualitatively for the uniform-quadratic specification of the CS model, which is often used in literature in the following manner: (i) Any two consecutive intervals without investigation differ in length by 4 b and are shorter than an absolute length expressed in c R , (ii) all intervals with probabilistic investigation are equal to this length, and (iii) all intervals with certain investigation are longer. The difference between the uniform-linear and the uninform-quadratic specification can be found in the expressions for the length of intervals with probabilistic investigation ( Chiba and Leong, 2013 ) and in the expressions for the investigation probabilities. The uniform-linear specification simplifies the exposition of equilibrium characterization results, as is shown in Figs.…”

“…Most closely related is the paper by Chiba and Leong (2013) , which adds a state-independent outside option for both S and R to a uniform-quadratic cheap-talk model. Having received a message from S, R decides on whether to take an action (as in CS) or the outside option.…”

“…In our model, the pay-off of S and R that result from investigation are state-independent and, therefore, investigation can be seen as an outside option. Chiba and Leong (2013) provide a characterisation of all purestrategy equilibria. The communication between S and R turns out to be richer in mixed-strategy equilibria.…”

Cheap talk with an exit option: a model of exit and voice

“…In other words, Matthews does not emphasize that the existence of the exit increases the informativeness of cheap talk, which is the main claim of the present paper. [8] also consider the exit option's effect on cheap talk. However, in their model, it is not the sender, but the receiver who has an exit option.…”

Information Transmission and Countervailing Biases in Organizations

“…If it is between an oil energy project and a renewable energy project, we may expect a negative correlation. If we compare projects related to Mac OS X and Macbook, respectively, there is a positive correlation between the payoffs from the two projects 3 , while between projects related to Mac OS X and Windows operation system, respectively, there may be a negative correlation. The assumption of the correlation in each example is reasonable based on inherent project relationships, contributing to the practical relevance of our study.…”