Cheap talk and sequential equilibria in signaling games. (English) Zbl 0856.90137

Manelli, Alejandro M.

Econometrica 64, No. 4, 917-942 (1996).

Summary: 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 \(\varepsilon\)-equilibrium of the game without cheap talk.

MSC:

91A05	2-person games
91A20	Multistage and repeated games

Keywords:

infinite action-games; infinite signaling games; sequential equilibria; cheap talk