Cheap talk

Some messages cost nothing to send and bind the sender to nothing. Whether such cheap talk is believed depends entirely on whether interests align.

Cheap talk is communication that is costless, non-binding, and unverifiable, mere words that commit the speaker to nothing. Because anyone can say anything at no cost, cheap talk is credible only when the speaker's interests are aligned with the listener's, and worthless when they conflict.

Words without cost or commitment

The defining feature is that the message carries no cost and no commitment, unlike a signal, which is credible precisely because it is costly to fake. Cheap talk is just talk: a claim, a promise, an assurance that the speaker is free to make whether or not it is true and free to break. This is why, in situations where the speaker has an incentive to mislead, cheap talk conveys no reliable information, the listener knows the speaker would say the same thing regardless.

When it works

Cheap talk is not always empty. When the interests of speaker and listener coincide, words can convey information usefully, because the speaker has no reason to lie. Two allies coordinating, or a firm and a customer with aligned interests, can communicate effectively at no cost. Cheap talk can also help players coordinate in games with multiple equilibria, where simply agreeing on which outcome to aim for is valuable even though no one is bound to it, because no one has an incentive to deviate once coordinated.

When it fails

Cheap talk breaks down exactly where it would be most useful: when interests conflict and the temptation to mislead is strong. A seller assuring a buyer of quality, a negotiator claiming a firm bottom line, a rival announcing intentions, all are discounted precisely because the speaker benefits from saying so whether or not it is true. Here only costly signals or binding commitments carry weight, which is why credible communication in adversarial settings requires putting something at stake rather than merely speaking.

Cheap talk marks the boundary of what words alone can achieve. It explains why communication is powerful among parties who trust and share interests, and nearly worthless among those who do not, and why, when interests diverge, credibility must be bought with cost or commitment rather than asserted for free.