Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/121361
Authors: 
Vida, Péter
Year of Publication: 
2015
Series/Report no.: 
SFB/TR 15 Discussion Paper 517
Abstract: 
We explore in an equilibrium framework whether games with multiple Nash equilibria are easier to play when players can communicate. We consider two variants, modelling talk about future plans and talk about past actions. The language from which messages are chosen is endogenous, messages are allowed to be vague. We focus on equilibria where messages are believed whenever possible, thereby develop a theory of credible communication. Predictions confirm the longstanding intuition for Aumann's (1990) Stag Hunt game which applies directly to an investment game with positive spillovers. Our results shed new light on the multiplicity of equilibria in economic applications.
Subjects: 
Pre-Play Communication
Cheap Talk
Credibility
Coordination
Language
Multiple Equilibria
JEL: 
C72
D83
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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