Dynamic Communication with Biased Senders
18 Pages Posted: 22 Aug 2017
Date Written: August 18, 2017
We study dynamic games in which senders with state-independent payoffs communicate to a single receiver. Senders’ private information evolves according to an aperiodic and irreducible Markov chain. We prove an analog of a folk theorem — that any feasible and individually rational payoff can be approximated in a perfect Bayesian equilibrium if players are sufficiently patient. In particular, there are equilibria in which the receiver makes perfectly informed decisions in almost every period, even if no informative communication can be sustained in the stage game. We conclude that repeated interaction can overcome strategic limits of communication.
Keywords: Bayesian Games, Repeated Games, Communication, Folk Theorem
JEL Classification: C72, C73, D82, D83
Suggested Citation: Suggested Citation