Relational Communication

Abstract

We study a communication game between an informed sender and an uninformed receiver with repeated interactions and voluntary transfers.Transfers motivate the receiver's decision-making and signal the sender's information.Although full separation can always be supported in equilibrium, partial or complete pooling is optimal if the receiver's decision-making is highly responsive to information.In this case, the receiver's decision-making is disciplined by pooling states where she is most tempted to defect.

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