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Hierarchical cheap talk ∗

By Attila Ambrus, Eduardo Azevedo and Yuichiro Kamada

Abstract

We investigate situations in which agents can only communicate to each other through a chain of intermediators, for example because they have to obey institutionalized communication protocols. We assume that all involved in the communication are strategic, and might want to influence the action taken by the final receiver. The set of outcomes that can be induced in pure strategy perfect Bayesian Nash equilibrium is a subset of the equilibrium outcomes that can be induced in direct communication, characterized by Crawford and Sobel (1982). Moreover, the set of supportable outcomes in pure equilibria is monotonic in each intermediator’s bias, and the intermediator with the largest bias serves as a bottleneck for the information flow. On the other hand, there can be mixed strategy equilibria of intermediated communication that ex ante Pareto-dominate all equilibria in direct communication, as mixing by an intermediator can relax the incentive compatibility constraints on the sender. We provide a partial characterization of mixed strategy equilibria, and show that the order of intermediators matters with respect to mixed equilibria, as opposed to pure strategy ones

Year: 2009
OAI identifier: oai:CiteSeerX.psu:10.1.1.417.2135
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