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Starting Small to Communicate

Atakan, Alp and Kockesen, Levent and Kubilay, Elif (2020) 'Starting Small to Communicate.' Games and Economic Behavior, 121. pp. 265-296. ISSN 0899-8256

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We analyze a repeated cheap-talk game in which the receiver is privately informed about the conflict of interest between herself and the sender and either the sender or the receiver controls the stakes involved in their relationship. We focus on payoff-dominant equilibria that satisfy a Markovian property and show that if the potential conflict of interest is large, then the stakes increase over time, i.e., “starting small” is the unique equilibrium arrangement. In each period, the receiver plays the sender’s ideal action with positive probability and the sender provides full in- formation as long as he has always observed his ideal actions in the past. We also show that as the potential conflict of interest increases, the extent to which the stakes are back-loaded increases, i.e., stakes are initially smaller but grow faster.

Item Type: Article
Uncontrolled Keywords: Communication; Cheap Talk; Reputation; Repeated Games; Career Path; Gradualism; Starting Small
Divisions: Faculty of Social Sciences
Faculty of Social Sciences > Economics, Department of
SWORD Depositor: Elements
Depositing User: Elements
Date Deposited: 23 Mar 2020 10:12
Last Modified: 18 Aug 2022 12:59

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