About the Speaker:

Murali Agastya is currently an Associate Professor at University of Sydney, while visiting the National University of Singapore, after being a permanent faculty member at University College London (1995-2000). From 2002-2006, he also held an Australian Research Fellowship. His research mainly focuses on theoretical and applied aspects of game theory -- applications include auctions, public goods and internal organization of the firm. The more theoretical aspects include decision theory for complex environments and modeling games without rules. His work has been published in Economic Theory, Games and Economic Behavior, Journal of Economic Theory and Review of Economic Studies. He is currently visiting National University Singapore.  

Abstract:

Over the last decade firms have set aside increasingly significant amounts of resources to invest in so called team bonding activities, holding motivational sessions, professional retreats etc. Such activities are useful in conveying to an individual employee what the success of the team as a whole means to her peers. As such information is conveyed mainly without anyone taking costly actions, I call such activities in the language of game theory, cheap talk. Cheap talk plays an important role in reducing the free rider effect when there is incomplete information of each other's preferences. Information transmission also occurs through the transparency of peers’ actions during actual production. Observability of a peer’s (costly) actions can reduce some of the uncertainty for later movers about the prospect of being taken for a free ride. As one might reasonably speculate, each of these forms of peer activities are separately ibeneficial. The purpose of this paper is to demonstrate that observability of peers’ actions confounds the effects of cheap talk. Cheap talk is highly effective when agents’ choices are simultaneous but sequential choices actions may allow agents only to babble — cheap talk conveys no information. What is more, this has negative welfare consequences in terms of probability of project’s completion, total expected contribution and ex-ante Pareto dominance.

Reservation:

Admission is free.  Please reply to Christina, e-mail: achristina@ntu.edu.sg or Tel: 6790-5689 to confirm your attendance.