Talking about cheap talk
During a session on communication games, Sophie presented the work "Endogenous Information Acquisition in Cheap-Talk Games". This paper studies costly information acquisition and transmission. An expert communicates with a decision-maker about a state of nature by sending a cheap-talk message. In efficient equilibria, the expert generally reveals all acquired information to the decision-maker. Sophie shows that the existence of efficient equilibria under general conditions. For the class of posterior separable cost structures, Sophie derives properties of efficient experiments. Under posterior-mean preferences, any cheap-talk problem is solved by a convex combination of two bi-pooling policies. The best bi-pooling policies are characterized for the uniform-quadratic case. Contrary to existing cheap-talk models, monotone partitions are not always optimal.