Optimal use of communication resources

Abstract. We study a repeated game with asymmetric informa-tion about a dynamic state of nature. In the course of the game, the better informed player can communicate some or all of his in-formation to the other. Our model covers costly and/or bounded communication. We characterize the set of equilibrium payoffs, and contrast these with the communication equilibrium payoffs, which by definition entail no communication costs. JEL Classification: C61, C73, D82. 1