Consider an uninformed decision maker (DM) who communicates with a partially informed speaker (S) through cheap talk. DM can choose a project to implement or the outside option of no project. We show that if the agentsÕ ex-ante rankings over projects do not coincide, then this conflict of...

Empirical studies have shown, paradoxically, that increasing the probability of apprehension can correlate with an increase in the total number of criminal actions. To examine this phenomenon, this paper develops a theory of "personal rules" based on the tradeoff between oneÕs self-image of...

We examine languages under two-dimensional uncertainty about the stateÑ the type and support of the state-distribution as well as the state is ex-ante uncertain. We consider communication between an uninformed decision maker and an imperfectly informed speaker. We show that this two-dimensional...

In Crawford and Sobel (1982) (CS), a sender (S) uses cheap talk to persuade a receiver (R) to select an action as profitable to S as possible. This paper shows that the presence of an outside option Ð that is, allowing R to avoid taking any action, yielding state-independent reservation...