Cheap talk, Kripke semantics, Common knowledge and two examples of boom, bust & asset bubbles

Josheski, Dushko and Zezova, Aleksandra and Miteva, Natasha (2025) Cheap talk, Kripke semantics, Common knowledge and two examples of boom, bust & asset bubbles. In: Challenges of tourism and business logistics in the 21st century.

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Abstract

This paper investigates the Crawford-Sobel model as cheap talk model where communication between players does (not) directly affect the payoffs of the game. Partition equilibrium and equilibrium actions do not converge with bias in beliefs. Green-Stoke model of information transmission showed that BNE differs from Cournot, Nash and Stackelberg and while Cournot is agent and principal best response, BNE is principal best response. Stackelberg equilibrium is outside of principals’ or agents' BR. Kripke model of partial separation with mixed strategy equilibrium show that if the world is w_H m_H beliefs/payoff ratio is higher than that of w_L m_H and if the world is w_H m_L beliefs/payoff ratio is higher than in w_L m_L world. In the common knowledge frame communication does not change the structure of knowledge in the model. Deterministic and bursting bubbles differ in the movement of dividend/price and capital gain. Whether investors coordinate for collective optimality Kantian equilibrium or not (Nash equilibrium) matters for asset bubble size.Dot.com bubble and 2008 financial crisis with Case-Shiller measure for housing bubble and S&P movements are investigated as some indicators for asset bubbles and cheap talk.

Item Type: Conference or Workshop Item (Paper)
Subjects: Social Sciences > Economics and business
Divisions: Faculty of Tourism and Business Logistics
Depositing User: Dusko Josevski
Date Deposited: 14 Aug 2025 07:37
Last Modified: 14 Aug 2025 07:37
URI: https://eprints.ugd.edu.mk/id/eprint/36235

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