Richer Cheap Talk

Communication is crucial in every human life. It also is very versatile and widely studied in the economic discipline. One aspect of economics is the study of strategic communication, to which this thesis contributes by creating a model and an extension to this model. The model is a signaling game based on existing literature (Crawford and Sobel, 1982; Gibbons, 1992), whereas the extension is new theory: it consists of a communication signal prior to the signaling game. In this thesis, it is proved that equilibria exist in which such a signal is sent and it is proved that this signal enriches communication in the signaling game. A condition for such an equilibrium to exist is that the interest asymmetry between the players of the signaling game is limited.