Wait and See

Peter Eso, Northwestern University
Yuk-Fai Fong, Northwestern University

Abstract

We study a dynamic cheap talk model with multiple senders where the receiver can choose when to make her decision and communication can take place over time. No player has the ability to commit to any action in the future, in particular, the receiver cannot commit to delay the decision. In contrast to the results in static versions of the model, we show that when the senders have common knowledge about the state of the world, there exists an equilibrium with instantenous, full revelation irrespective of the size and direction of the senders’ biases. We show that the equilibrium is robust to various perturbations including the introduction of noise in the senders’ signals about the state.