Non-Fully Strategic Information Transmission

Abstract

Building on Crawford and Sobel's (1982) general communication model, this paper introduces the possibility that players are non-strategic. The sender might be honest, truthfully reporting private information, or the receiver might be naive, blindly implementing the sender's recommendations . In contrast to the predictions of the fully-strategic model, we show that equilibrium communication is inflated but detailed, and that the equilibrium outcome is biased in an ex-ante sense. Our findings are relevant to understanding communication by financial analysts and academic evaluators.communication, bounded rationality, financial advice, grade inflation