“Cheap Talk with Higher-Order Imperfect Knowledge” by Ernest K. LAI
Ernest K. LAI
University of Pittsburgh
Unviersity of Pittsburgh
This paper studies a strategic information transmission game, which we call Imperfect Talk, where the sender is imperfectly informed, and the receiver in turn has only imperfect knowledge on how informed the sender is. We transform the Imperfect Talk game with two-dimensional type into a Crawford and Sobel's (1982) cheap talk game with one-dimensional type. We characterize the equilibria of the transformed game which allows us to study the equilibria of the original Imperfect Talk game.