60 Pages Posted: 31 Jul 2018 Last revised: 8 Aug 2018
Date Written: August 6, 2018
We study a communication game between an informed sender and an uninformed receiver with repeated interactions and voluntary transfers. Transfers motivate the receiver’s decision-making and signal the sender’s information. Although full separation can always be supported in equilibrium, partial or complete pooling is optimal if the receiver’s decision-making is too responsive to information. In this case, the receiver’s decision-making is disciplined by pooling extreme states, where she is most tempted to defect. In characterizing optimal equilibria, we establish new results on monotone persuasion.
Keywords: strategic communication, monotone persuasion, relational contracts
JEL Classification: C73, D82, D83
Suggested Citation: Suggested Citation