Information Transmission When the Informed Party Is Confused

It is generally accepted within the literature on information transmission that in sender–receiver games little or no information will be revealed by the sender as long as the parties have divergent preferences and certifiable claims cannot be made. I show that this conclusion doesnothold when there is two-sided incomplete information. In fact, fully revealing equilibria often exist. I motivate the study of two-sided incomplete information by considering that the sender is confused about the meaning of his private information and I discuss the implications for firms, one of which is that some decisions are optimally delayed.Journal of Economic LiteratureClassification Numbers: C72, L20.