CIREQ-Concordia Seminar
joint with the Department of Economics, Concordia University
room H-1145 (Concordia University, 1455 de Maisonneuve Blvd ouest, 11th floor)
Organizer : Ming Li (Concordia U.)
Abstract : An informed Advisor and an uninformed Decision-Maker engage in repeated cheap talk communication in always new (stochastically independent) decision problems. They have a conflict of interest over which action should be implemented at least in some cases. Our main result is that, while the Decision-Maker’s optimal payoff is attainable in some subgame perfect equilibrium (by force of the usual folk theorem), no payoff profile close to the Decision-Maker’s optimal one is immune to renegotiation. Pareto efficient renegotiation-proof equilibria are typically attainable, and they constitute a compromise between the Advisor and the Decision-Maker.
