The strategic role of nonbinding communication (Q2336965)

Summary: This paper studies the conditions that improve bargaining power using threats and promises. We develop a model of strategic communication, based on the \textit{conflict game with perfect information}, in which a noisy \textit{commitment message} is sent by a better-informed sender to a receiver who takes an action that determines the welfare of both. Our model captures different levels of aligned-preferences, for which classical games such as \textit{stag hunt}, \textit{hawk-dove}, and \textit{prisoner's dilemma} are particular cases. We characterise the Bayesian perfect equilibrium with nonbinding messages under \textit{truth-telling beliefs} and \textit{sender's bargaining power} assumptions. Through our equilibrium selection we show that the less conflict the game has, the more informative the equilibrium signal is and less credibility is necessary to implement it.