On Strategic Transmission of Gradually Arriving Information

• Authors: Alexander Frug.
• BSE Working Paper: 110619 | January 20
• Keywords: cheap talk , gradual learning
• JEL codes: D82, D83
• cheap talk
• gradual learning

The main insight of the literature on strategic information transmission is that even a small conflict of interest between a fully informed sender (e.g., a financial adviser) and an uninformed receiver (an investor) often poses considerable difficulties for effective communication. However, in many real-life situations, the sender is not fully informed at the outset but gradually studies the case before offering advice. The gradual arrival of information to the sender weakens the strategic barriers between the players and significantly improves communication.