Cheap talk

Cheap Talk is a term used in Game Theory for pre-play communication which carries no cost. For example, in the Prisoner's Dilemma one might add a round of pre-play communication where each player announces the action they intend to take (or alternatively the action they would like the other to take). In the Prisoner's dilemma cheap talk is not expected to have any effect (for an exception see Robson 1990). In other games Cheap Talk does have a demonstrated effect on play.

Biological applications

It has been commonly argued that cheap talk will have no effect on the underlying structure of the game. In biology authors have often argued that costly signalling best explains signalling between animals (see Handicap theory). This general belief has been receiving some challenges (see work by Carl Bergstrom and Brian Skyrms 2002, 2004). In particular, several models using evolutionary game theory indicate that cheap talk can have effect on the evolutionary dynamics of particular games.

References

Robson, A.J. (1990) “Efficiency in Evolutionary Games: Darwin, Nash, and the Secret Handshake.” Journal of Theoretical Biology 144: 379-396.

Skyrms, B. (2002) “Signals, Evolution and the Explanatory Power of Transient Information.” Philosophy of Science 69: 407-228.

Skyrms, B. (2004) The Stag Hunt and the Evolution of Social Structure. New York: Cambridge University Press.