Reputational cheap talk: influentialness and welfare
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arXiv
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| Format: | Preprint |
| Published: |
2025
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| _version_ | 1866908919729750016 |
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| author | Vong, Allen |
| author_facet | Vong, Allen |
| contents | A sender communicates private information about a hidden state to a receiver who seeks to match his action to that state. The sender strives to appear informed at the receiver's expense. I characterize informative equilibria under a broad class of signal structures and show that, when they exist, they are essentially unique. I show that informative equilibria can be noninfluential, in which case the receiver does not benefit from communication and relies only on prior information. My main results identify a complementarity that sufficiently precise prior information helps restore influential communication and characterize how the receiver's welfare depends on the quality of prior information. I also characterize how the sender's initial reputation for being informed shapes these results. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2505_11877 |
| institution | arXiv |
| publishDate | 2025 |
| record_format | arxiv |
| spellingShingle | Reputational cheap talk: influentialness and welfare Vong, Allen Theoretical Economics A sender communicates private information about a hidden state to a receiver who seeks to match his action to that state. The sender strives to appear informed at the receiver's expense. I characterize informative equilibria under a broad class of signal structures and show that, when they exist, they are essentially unique. I show that informative equilibria can be noninfluential, in which case the receiver does not benefit from communication and relies only on prior information. My main results identify a complementarity that sufficiently precise prior information helps restore influential communication and characterize how the receiver's welfare depends on the quality of prior information. I also characterize how the sender's initial reputation for being informed shapes these results. |
| title | Reputational cheap talk: influentialness and welfare |
| topic | Theoretical Economics |
| url | https://arxiv.org/abs/2505.11877 |