Competition in Costly Talk

TL;DR

This paper analyzes a costly communication game with conflicting senders and a decision maker, showing how belief restrictions lead to a unique equilibrium with partial information transmission and revealing the communication language used.

Contribution

It introduces a belief structure that ensures a robust, unique equilibrium with partial information in costly communication games.

Findings

Equilibria with full information depend on undesirable beliefs.

Imposing minimal belief restrictions yields a unique partial information equilibrium.

Characterization of sender communication language in equilibrium.

Abstract

This paper studies a communication game between an uninformed decision maker and two perfectly informed senders with conflicting interests. Senders can misreport information at a cost that increases with the size of the misrepresentation. The main results show that equilibria where the decision maker obtains the complete-information payoff hinge on beliefs with undesirable properties. The imposition of a minimal and sensible belief structure is sufficient to generate a robust and essentially unique equilibrium with partial information transmission. A complete characterization of this equilibrium unveils the language senders use to communicate.