Cheap talk and sequential equilibria in signaling games

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20 Scopus citations

Abstract

Well-behaved infinite signaling games may have no sequential equilibria. We prove that adding cheap talk to these games "solves" the nonexistence problem: the limit of sequential equilibrium outcomes of finite approximating games is a sequential equilibrium outcome of the cheap-talk extension of the limit game. In addition, when the signaling space has no isolated points, any cheap-talk sequential equilibrium outcome can be approximated by a sequential ε-equilibrium of the game without cheap talk.

Original languageEnglish (US)
Pages (from-to)917-942
Number of pages26
JournalEconometrica
Volume64
Issue number4
DOIs
StatePublished - Jul 1996
Externally publishedYes

Keywords

  • Cheap talk
  • Existence
  • Infinite action-games
  • Sequential equilibrium
  • Signaling games

ASJC Scopus subject areas

  • Economics and Econometrics

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