Economists often ask how private information is shared through markets, costly signaling,
and other mechanisms. Yet most information sharing is done through ordinary, informal
talk. Economists are inconsistent in their view of such 'cheap talk': sometimes it
is supposed that communication generally leads to efficient equilibria; other times
it is supposed that since 'talk is cheap,' it is never credible. The authors think
both views are wrong. In this paper, they describe what some recent research in game
theory teaches about when people will convey private information by cheap talk.