Information Transmission and its Distortions: A Study of Cheap-Talk Games

Abstract: Lies as distorters of information transmission are examined in this paper. A survey of research conducted on games featuring costless information transmission leads to a characterization of several types of lies. The relevant type of lie depends on the shape of players? strategy sets. Individuals? perception of different types of lies varies. Active misrepresentation is viewed as the most serious violation and thus individuals experience substantial lie aversion when confronted with such an alternative. For active misrepresentation to succeed additional characteristics such as differing player knowledge or non detectable lies are often required. When multiple players are present on either the sender or receiver side lying becomes more difficult in general, although there are situations where the opposite is true. The characterization of distortions in information transmission can help make policy decisions aimed at increasing truthful revelation more effective since different lies are prevented by dissimilar strategies.