If a game contains private information, then
A)the game's outcome is affected.
B)firms will engage in cheap talk to coordinate their actions.
C)players will decide not to play the game.
D)third-party negotiations are necessary to resolve the information gap.

Question

Quizplus · Accepted Answer

Private information in a game can affect the outcome of the game since the other players may not have all the information needed to make the best decisions. This is why mechanisms such as signaling and screening are used to reveal private information and reduce information asymmetry. Firms engaging in cheap talk and third-party negotiations may be applicable in certain situations, but not all games require them. Players deciding not to play the game is also possible, but it is not always the case.

If a Game Contains Private Information, Then