Justified Communication Equilibrium
Name
aer.20201692.pdf
Description
Published version
Size
700.1 KB
Format
Adobe PDF
Checksum (MD5)
8849abcd250878f633336ee459a51429
Author(s)
Clark, Daniel
Fudenberg, Drew
Date Issued
2021
Journal
American Economic Review
Publisher
American Economic Association
Citation
Clark, Daniel and Fudenberg, Drew. 2021. "Justified Communication Equilibrium." American Economic Review, 111 (9).
Version
Final published version
Abstract
Justified communication equilibrium (JCE) is an equilibrium refinement for signaling games with cheap-talk communication. A strategy profile must be a JCE to be a stable outcome of nonequilibrium learning when receivers are initially trusting and senders play many more times than receivers. In the learning model, the counterfactual “speeches” that have been informally used to motivate past refinements are messages that are actually sent. Stable profiles need not be perfect Bayesian equilibria, so JCE sometimes preserves equilibria that existing refinements eliminate. Despite this, it resembles the earlier refinements D1 and NWBR, and it coincides with them in co-monotonic signaling games. (JEL C70, D82, D83, J23, M51)
MIT Department
Massachusetts Institute of Technology. Department of Economics
Terms of Use
Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
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DOI of Published Version
https://doi.org/10.1257/AER.20201692
