The Strategic Role of Nonbinding Communication

This paper studies the conditions that improve bargaining power using threats and promises. We develop a model of strategic communication, based on theconflict game with perfect information, in which a noisycommitment messageis sent by a better-informed sender to a receiver who takes an action that determines the welfare of both. Our model captures different levels of aligned-preferences, for which classical games such asstag hunt,hawk-dove, andprisoner’s dilemmaare particular cases. We characterise the Bayesian perfect equilibrium with nonbinding messages undertruth-telling beliefsandsender’s bargaining powerassumptions. Through our equilibrium selection we show that the less conflict the game has, the more informative the equilibrium signal is and less credibility is necessary to implement it.