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Goodwill in communication

Kuvalekar, Aditya and Lipnowski, Elliot and Ramos, João (2022) 'Goodwill in communication.' Journal of Economic Theory, 203. p. 105467. ISSN 0022-0531

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Abstract

An expert advises a decision maker over time. With both the quality of advice and the extent to which it is followed remaining private, the players have limited information with which to discipline each other. Even so, communication in and of itself facilitates cooperation, the relationship evolving based on the expert's advice. We show a formal equivalence between our setting and one of cheap talk with capped money burning, enabling an exact characterization (at fixed discounting) of the expert's attainable payoffs. While an ongoing relationship often helps, our characterization implies that, absent feedback, relational incentives can never restore commitment.

Item Type: Article
Uncontrolled Keywords: Communication; Cheap-talk; Repeated; Long-run relationship
Divisions: Faculty of Social Sciences
Faculty of Social Sciences > Economics, Department of
SWORD Depositor: Elements
Depositing User: Elements
Date Deposited: 03 May 2022 14:36
Last Modified: 18 Aug 2022 10:50
URI: http://repository.essex.ac.uk/id/eprint/32782

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