Cheap-talk models address the question of how much information can be credibly transmitted when communication is direct and costless. When a single informed expert, who is biased, gives advice to a decision maker, only noisy information can be credibly transmitted. The more biased the expert is, the noisier the information. The decision maker can improve information transmission by: (a) more extensive communication, (b) soliciting advice from additional experts, or (c) writing contracts with the expert.
KeywordsCheap talk Communication equilibria Delegation principle Games with incomplete information Incentive contracts Revelation principle Signalling
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