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Multi-sided Pre-play Communication by Burning Money

Authors
Journal
Journal of Economic Theory
0022-0531
Publisher
Elsevier
Publication Date
Volume
69
Issue
1
Identifiers
DOI: 10.1006/jeth.1996.0043

Abstract

Abstract We investigate the consequences of allowing some players to send a costly message before a game is played. Since messages have no literal meaning, sending costly messages is also called “burning money.” We consider a setting with nplayers among which khave the possibility to burn money. We show that strategy profiles in sets that are closed under rational behavior yield all players that have the possibility to burn, their preferred outcome. Moreover, in such equilibria no money is actually burnt; the possibility alone suffices. For the special case with two players all results go through for persistent retracts as well. Journal of Economic LiteratureClassification Number: C72.

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