2012 Theses Doctoral

Four essays on strategic communication

Loginova, Uliana

This dissertation studies patterns of strategic communication in cases, in which the involved parties disagree in their preferences or opinions. In Chapter 1, I study a model of strategic communication in networks, in which the players diverge in their preferences and information can be communicated either through a costly verifiable information (hard) channel or through a low-cost cheap talk (soft) channel. I find that the availability of hard links allows each agent to get a weakly greater number of truthful messages compared to the pure cheap talk setting. If only one party bears the cost of a hard link, then introducing hard links increases the total expected welfare. In contrast, if the cost of a hard link is shared by both parties, then allowing for verifiable communication can decrease the total welfare. In Chapter 2, I consider a model of strategic cheap talk communication in networks, in which the players can disagree in their preferences or their opinions. I find that the information transmission pattern crucially depends on the nature of the disagreement. If the agents diverge in their preferences, then information transmission exhibits a negative externality effect: greater information obtained by some agent discourages further information accumulation by harming the credibility of other agents. In contrast, information transmission displays a positive externality effect when the agents have divergent opinions: greater information obtained by some agent encourages further information accumulation by improving the credibility of other agents. Chapter 3 studies a benevolent authority's decision to constrain or inform a population of individuals. It demonstrates that the authority's decision to regulate an activity depends on whether she deems it a matter of preference or opinion. In the former case, the benevolent authority is libertarian: she gives truthful advice and safeguards liberty. In the latter case, the benevolent authority is paternalistic: believing that she acts in the individuals' best interest, the authority forces another action than the individuals would choose for themselves. In Chapter 4, I consider communication between an informed Sender and an uninformed Receiver. The Sender has a preference bias and is guilt averse to letting down the Receiver's payoff expectations. I show that no separating equilibrium exists; rather, in case of uniform state of the world and quadratic utilities, I demonstrate that there exist partition equilibria (as in Crawford and Sobel (1982)). An increase in the guilt aversion intensity is akin a decrease in the preference divergence: higher guilt aversion intensity allows for more intervals in the equilibrium partition; and holding the number of elements in the partition fixed, greater guilt aversion intensity results in more balanced intervals.