We introduce cheap talk in a dynamic investment model with information externalities. We first show how social learning adversely affects the credibility of cheap talk messages. Next, we show how an informational cascade makes truth-telling incentive compatible. A separating equilibrium only...

We introduce cheap talk in a dynamic investment model with information externalities. We first show how social learning adversely affects the credibility of cheap talk messages. Next, we show how an informational cascade makes thruthtelling incentive compatible. A separating equilibrium only...

We model a two-candidate electoral competition in which there is uncertainty about a policy-relevant state of the world. The candidates receive private signals about the true state, which are imperfectly correlated. We study whether the candidates are able to credibly communicate their...