Information Structure of the Reputational Cheap Talk Game (IMAGE)
Caption
Marco Ottaviani and Salvatore Nunnari (Bocconi University, Milan) along with Debrah Meloso (Toulouse Business School) designed an urn and balls scheme. Each ball has an outer shell and an inner core. The inner core itself is either blue or orange. The outer shell is opaque (it does not allow to see the core’s color) and is also either blue or orange. There are two 10-ball urns corresponding to the quality of information of the forecaster. The inner core perfectly matches the color of the outer shell for all the balls contained in the informative urn, corresponding to a forecaster who perfectly knows the future. The uninformative urn captures a forecaster who has no ability to predict the future: the color of the shell is independent of the color of the core.
Credit
Bocconi University, Milan
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For journalistic purposes only
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Original content