FSS-DECO seminar: Strategic Understatement

Speaker: Prof. Ye JIN, Assistant Professor of Economics, NYU Shanghai

Date: 22 Oct 2025 (Wednesday)

Time: 14:00-15:15

Language: English

Venue: E21B-G002

Abstract: We study how an informed party (sender) with state-independent preferences persuades the uninformed party (receiver) to take the sender’s preferred action via strategic communication. In the single-item case, information transmission is impossible. In contrast, when the sender aims to promote multiple items, strategic understatement– not recommending certain items while recommending the rest–arises as an equilibrium strategy in theory and is observed in our experiments. Compared with the single-item case, strategy understatements lead to more information transmission and higher payoffs for both parties. We derive a continuum of mixed strategy equilibria in multiple-item (or dimension) cheap talk, and explain our experimental observations through a QRE model with heterogeneity.