Straight Talk

We revisit the Sender-Receiver game of Crawford and Sobel (1982), and examine whether allowing for long cheap talk increases the set of payoffs. We show that it does, for biases in the range [1/8, 1/ √ 8], and explicitly derive the best equilibrium within some class. We show that the payoff increases with the length of the cheap talk phase, although there is no discontinuity at infinity. Because only finitely many messages (and two rounds) suffice for lower biases, this shows that the number of messages necessary to implement the best equilibrium is not increasing in the congruence of the players’ preferences, unlike what the static cheap talk game suggests.