Description: Department Seminar

Location: 368A Heady Hall

Contact: Jian Li

Title: Communicating about Endogenous Issues

Abstract: A sender communicates about a multidimensional state with a receiver who is boundedly rational: he is restricted to interpreting the sender's messages as describing the best course of action in a small number of endogenously chosen issues. We model this restriction by requiring the receiver to use a low-dimensional linear strategy. Both players would like the action to be perfectly tailored to the state, but they may have different preferences, disagreeing over which aspects of the state are most important to match. We find that equilibrium is shaped only by the sender's perspective, because she cannot jointly communicate issues she deems differentially important. We identify a new equilibrium miscoordination risk, whereby the players may end up communicating about issues both players find to be minute. A receiver concerned about such a risk may prefer a sender with a differing perspective.