Find in Library

In the Crawford–Sobel (uniform, quadratic utility) cheap-talk model, we consider a <i>simple</i> mediation scheme (a communication device) in which the informed agent reports one of the <i>N</i> possible elements of a partition to the mediator and then the mediator suggests one of the <i>N</i> actions to the uninformed decision-maker according to the probability distribution of the device. We show that no such <i>simple</i> mediated equilibrium can improve upon the unmediated <i>N</i>-partition Crawford–Sobel equilibrium when the preference divergence parameter (bias) is small.