Strategic Information Transmission

Strategic information transmission is the study of how agents with misaligned incentives communicate private information, and how much information can be credibly conveyed when the sender cannot commit to a signal structure. The canonical model, developed by Crawford and Sobel in 1982, shows that even when communication is costless — "cheap talk" — some information can be transmitted if the sender's and receiver's preferences are not too divergent.

The central result is disheartening: full revelation is impossible unless preferences are perfectly aligned. The sender partitions the state space into intervals, sending only which interval obtains, and the fineness of the partition depends on the degree of preference alignment. More divergence means coarser partitions, and beyond a threshold, no information is transmitted at all. The model explains why experts hedge, why politicians obfuscate, and why managers withhold bad news.

Strategic information transmission contrasts sharply with Bayesian persuasion, where the sender can commit to an information structure. The gap between the two models — cheap talk versus committed persuasion — is the gap between interpersonal conversation and institutional communication. In practice, most information transmission lies somewhere between these extremes, with partial commitment maintained by reputation, repeated interaction, or mechanism design. See signaling game for the case where the sender takes costly actions to communicate type.