Abstract
This paper proposes a model of ambiguous language. We consider a simple cheap talk game in which a sender who faces an ambiguity averse receiver is able to perform ambiguous randomization, i.e. to randomize according to unknown probabilities. We show that for any standard influential communication equilibrium there exists an equilibrium featuring an ambiguous communication strategy which Pareto-dominates it in terms of consistent planning ex ante utilities. Ambiguity, by triggering worst-case decision-making by the receiver, shifts the latter's response to information towards the sender's ideal action, thus encouraging more information transmission.
Original language | English |
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Pages (from-to) | 1-17 |
Number of pages | 17 |
Journal | Journal of Economic Theory |
Volume | 173 |
Early online date | 24 Oct 2017 |
DOIs | |
Publication status | Published - Jan 2018 |
Keywords
- cheap talk
- Ambiguity
Profiles
-
Mark Le Quement
- School of Economics - Visitor
- Centre for Behavioural and Experimental Social Science - Member
- Behavioural Economics - Member
- Economic Theory - Member
- Industrial Economics - Member
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