Journal of Applied Mathematics

  • J. Appl. Math.
  • Volume 2015, Special Issue (2015), Article ID 910614, 11 pages.

The Strategic Role of Nonbinding Communication

Luis A. Palacio, Alexandra Cortés-Aguilar, and Manuel Muñoz-Herrera

Full-text: Access denied (no subscription detected)

We're sorry, but we are unable to provide you with the full text of this article because we are not able to identify you as a subscriber. If you have a personal subscription to this journal, then please login. If you are already logged in, then you may need to update your profile to register your subscription. Read more about accessing full-text

Abstract

This paper studies the conditions that improve bargaining power using threats and promises. We develop a model of strategic communication, based on the conflict game with perfect information, in which a noisy commitment message is sent by a better-informed sender to a receiver who takes an action that determines the welfare of both. Our model captures different levels of aligned-preferences, for which classical games such as stag hunt, hawk-dove, and prisoner’s dilemma are particular cases. We characterise the Bayesian perfect equilibrium with nonbinding messages under truth-telling beliefs and sender’s bargaining power assumptions. Through our equilibrium selection we show that the less conflict the game has, the more informative the equilibrium signal is and less credibility is necessary to implement it.

Article information

Source
J. Appl. Math., Volume 2015, Special Issue (2015), Article ID 910614, 11 pages.

Dates
First available in Project Euclid: 13 October 2015

Permanent link to this document
https://projecteuclid.org/euclid.jam/1444742717

Digital Object Identifier
doi:10.1155/2015/910614

Mathematical Reviews number (MathSciNet)
MR3396024

Citation

Palacio, Luis A.; Cortés-Aguilar, Alexandra; Muñoz-Herrera, Manuel. The Strategic Role of Nonbinding Communication. J. Appl. Math. 2015, Special Issue (2015), Article ID 910614, 11 pages. doi:10.1155/2015/910614. https://projecteuclid.org/euclid.jam/1444742717


Export citation

References

  • A. Rubinstein, “Perfect equilibrium in a bargaining model,” Econometrica, vol. 50, no. 1, pp. 97–109, 1982.
  • T. Schelling, The Strategy of Conflict, Harvard University Press, Cambridge, Mass, USA, 1960.
  • R. Selten, “Reexamination of the perfectness concept for equilibrium points in extensive games,” International Journal of Game Theory, vol. 4, no. 1, pp. 25–55, 1975.
  • A. Dixit, “Thomas Schelling's contributions to game theory,” Scandinavian Journal of Economics, vol. 108, no. 2, pp. 213–229, 2006.
  • R. B. Myerson, “Learning from schelling's strategy of conflict,” Journal of Economic Literature, vol. 47, no. 4, pp. 1109–1125, 2009.
  • J. Hirshliefer, On the Emotions as Guarantors of Threats and Promises, MIT Press, Cambridge, Mass, USA, 1987.
  • J. Hirshliefer, “Game-theoretic interpretations of commitment,” in Evolution and the Capacity for Commitment, R. M. Nesse, Ed., Russell Sage Foundation, New York, NY, USA, 2001.
  • D. B. Klein and B. O'Flaherty, “A game-theoretic rendering of promises and threats,” Journal of Economic Behavior and Organization, vol. 21, no. 3, pp. 295–314, 1993.
  • V. P. Crawford and J. Sobel, “Strategic information transmission,” Econometrica, vol. 50, no. 6, pp. 1431–1451, 1982.
  • J. Farrell, “Meaning and credibility in cheap-talk games,” Games and Economic Behavior, vol. 5, no. 4, pp. 514–531, 1993.
  • J. Farrell and M. Rabin, “Cheap talk,” Journal of Economic Perspectives, vol. 10, no. 3, pp. 103–118, 1996.
  • M. Rabin, “Communication between rational agents,” Journal of Economic Theory, vol. 51, no. 1, pp. 144–170, 1990.
  • S. Baliga and T. Sjöström, “Arms races and negotiations,” Review of Economic Studies, vol. 71, no. 2, pp. 351–369, 2004.
  • T. Schelling, “An essay on bargaining,” The American Economic Review, vol. 46, pp. 281–306, 1956.
  • G. E. Bolton, “Bargaining and dilemma games: from laboratory data towards theoretical synthesis,” Experimental Economics, vol. 1, no. 3, pp. 257–281, 1998. \endinput