Dynamic Strategic Information Transmission
Andrea Wilson*, Vasiliki Skreta, Mikhail Golosov, Aleh Tsyvinski
Date: 2011-05-13 5:00 pm – 5:30 pm
Last modified: 2011-04-09
Abstract
This paper studies strategic information transmission in a dynamic environment, where a privately informed expert and a decision maker interact for a finite number of periods. Our theoretical results argue that the dynamic cheap talk games are fundamentally different from Crawford-Sobel's static setup. In a multi-period setting, incentives between the expert and DM effectively become correlated, in a way that allows for much more information to be revealed (for example, through the use of "trigger strategies", in which the expert promises better advice in the future if the DM chooses an action he likes now). Our main result states that, in contrast to any result in the static literature, full information revelation is possible in dynamic cheap-talk games.