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Credulity, lies, and costly talk. (English) Zbl 1156.91322
Summary: This paper studies a model of strategic communication by an informed and upwardly biased sender to one or more receivers. Applications include situations in which (i) it is costly for the sender to misrepresent information, due to legal, technological, or moral constraints, or (ii) receivers may be credulous and blindly believe the sender’s recommendation. In contrast to the predictions obtained in the benchmark cheap talk model, our model admits a fully separating equilibrium, provided that the state space is unbounded above. The language used in equilibrium is inflated and naive receivers are deceived.

MSC:
91A28 Signaling and communication in game theory
91A10 Noncooperative games
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