12 February: Andres Salamanca (QSMS Seminar)

Presenting “The Value of Mediated Communication” at 12:15-13:30 in QA406.


On 12 February  2020, we have Andres Salamanca of University of Southern Denmark visiting us. He is going to give a seminar on “The Value of Mediated Communication” at 12:15-13:30 in room A406 in Building Q, Budapest University of Technology and Economics, Faculty of Economic and Social Sciences, Magyar tudósok körútja 2, 1117 Budapest. Sandwiches will be provided. Please help the organisers by registering in advance at egervari.zsuzsanna@qsms.bme.hu Registration is free.
Also, see our Facebook event.

Abstract: This paper characterizes optimal communication equilibria (which model mediation) in senderreceiver
games. We assume that communication devices are designed to maximize the ex-ante welfare of the informed party (i.e., the sender). Communication equilibria are defined by a set of linear incentive constraints. The associated dual variables of these constraints yield shadow prices that are used to get “virtual utility functions” that intuitively characterize the signaling costs of incentive compatibility. A key result is a characterization of the value of an optimal communication equilibrium (value of mediation) from the concavification of the sender’s indirect virtual utility function over prior beliefs. Using this result, we provide necessary and sufficient conditions for a communication equilibrium to be optimal. An additional result establishes a bound on the number of messages that the sender needs to convey in order to achieve the value of mediation.