Document Type

Working Paper

Abstract

This paper investigates the possible equilibria in a game of information transmission with incomplete information. Two individuals are required to reach a decision between two alternativ es and a decision is reached only if they can agree on it. Individuals receive private signals and can send messages to each other sequentially. However, they can only send binary messages and the sending of messages is time consuming. We investigate the possible equilibria when the individuals agree on the desired outcomes and when they do not. We show that when the players have the same preferences over outcomes there is a limited amount of disagreement that can take place. Also, that as the players become more patient the only equilibria which survive are those where information is aggregated efficiently and less delay is incurred. Further, we show that, when players are impatient an increase in impatience can serve to improve efficiency. In the case of biased players the equilibria are similar to the ones for the no-bias case. We show that the player who is more patient and who moves first is able to reach decisions favorable to himself. If both players are patient there is an equilibrium where there is a large amount of disagreement. For such a situation the imposition of a time limit on the amount of discussion allowed would improve efficiency.

Publication Date

1-4-1997

Publisher

Indian Institute of Management Bangalore

Relation

IIMB Working Paper-104

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