Working Paper

Implementation of Communication Equilibria by Correlated Cheap Talk: The Two-Player Case

Péter Vida, Francoise Forges
CESifo, Munich, 2011

CESifo Working Paper No. 3360

We show that essentially every communication equilibrium of any finite Bayesian game with two players can be implemented as a strategic form correlated equilibrium of an extended game, in which before choosing actions as in the Bayesian game, the players engage in a pos-sibly infinitely long (but in equilibrium almost surely finite), direct, cheap talk.

CESifo Category
Industrial Organisation
Keywords: Bayesian game, cheap talk, communication equilibrium, correlated equilibrium, pre-play communication
JEL Classification: C720, D700