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The result of world powers in WTO: A cheap-talk game under different communication protocols

Id：2387 Date：20131201 Status： ClickTimes：
作者Yun Wang
正文Official reports and case studies reveal that China experienced different means of communication with the world powers since it joined the World Trade Organization in 2001. In the first five years, China had public communication with both the United States and the European Union under the Transitional Review Mechanism. In 2006 a new means of communication, the China–US Strategic and Economic Dialogue, started to take effect. Reports show that the new mechanism has advanced the China–US relationship positively and productively. The difference between the two means of communication stimulates our study. We adopt a game theory model to examine the impact of different communication protocols on China's incentives to reveal information. We analyze a cheap-talk game between an informed agent and two uninformed principals who coordinate actions under two communication protocols: public and private communication. First, all equilibria under both means of communication are characterized. Information precision of the agent's equilibrium messages decreases with the principals' preference biases. Second, under private communication the agent communicates more informatively with one principal if she in effect reveals little information to the other. Under private communication there exists an informative equilibrium with asymmetric levels of information precision even when all equilibria under public communication are uninformative.
JEL-Codes：C72; D82; D83; F13; F53
关键词：Strategic information transmission; Tacit coordination; Public communication; Private communication; WTO
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