By Aditya V. Kuvalekar, Lipnowski , João Ramos
Journal of Economic Theory | July 2022
Kuvalekar, A., Lipnowski, E., Ramos, J. (2022). Goodwill in communication. Journal of Economic Theory, 203
Journal of Economic Theory, July 2022
An expert advises a decision maker over time. With both the quality of advice and the extent to which it is followed remaining private, the players have limited information with which to discipline each other. Even so, communication in and of itself facilitates cooperation, the relationship evolving based on the expert's advice. We show a formal equivalence between our setting and one of cheap talk with capped money burning, enabling an exact characterization (at fixed discounting) of the expert's attainable payoffs. While an ongoing relationship often helps, our characterization implies that, absent feedback, relational incentives can never restore commitment.
Aditya Kuvalekar is a microeconomist whose primary research area is information economics. His research examines how changes in information environments shape individual and collective behavior, with applications ranging from protests and voting to interactions within organizations. A second strand of his work focuses on market design, including problems of land acquisition from groups and school choice when students have non-standard preferences. His research has been published in leading economics journals, including The American Economic Review, The RAND Journal of Economics, American Economic Journal: Microeconomics, and Journal of Economic Theory.
