Abstract
Cheap-talk models address the question of how much information can be credibly transmitted when communication is direct and costless. When a single informed expert, who is biased, gives advice to a decision maker, only noisy information can be credibly transmitted. The more biased the expert is, the noisier the information. The decision maker can improve information transmission by: (a) more extensive communication, (b) soliciting advice from additional experts, or (c) writing contracts with the expert.
This chapter was originally published in The New Palgrave Dictionary of Economics, 2nd edition, 2008. Edited by Steven N. Durlauf and Lawrence E. Blume
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Krishna, V., Morgan, J. (2008). Cheap Talk. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95121-5_2525-1
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DOI: https://doi.org/10.1057/978-1-349-95121-5_2525-1
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Publisher Name: Palgrave Macmillan, London
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