Private Languages

Strategic communication often relies on anchors observed by the sender but not by the receiver. An analyst may report against a proprietary valuation model, an auditor against an internal score, a manager against an accounting estimate, or an institution against its own standard. I study a sender-receiver game in which reports are costly to move away from such privately observed anchors. Anchor heterogeneity changes the geometry of communication. Rather than relying on partitions, privately anchored reporting generates continuous variation in messages because different senders find different reports costly to make. This mechanism can improve information transmission, but it can also pull reports toward noisy private anchors. I show that (i) small positive reporting costs can make communication approach full revelation, even though zero costs return the model to cheap talk, (ii) uninformative anchors can transmit information through strategic distortions. Anchored reports and cheap-talk messages can co-exist as endogenous hard and soft information, but cheap-talk alone is preferred by all parties under sufficiently low misalignment, explaining why organizations may rely exclusively on informal channels. JEL codes: D82, D83, C72.

Authors

Institutions

Publication Details

Journal
Zenodo (CERN European Organization for Nuclear Research)
Published
2026-05-23
DOI
https://doi.org/10.5281/zenodo.20359558
Primary Topic
Auditing, Earnings Management, Governance
Type
article
Field-Weighted Citation Impact
0.00
Controls
|||
ALL TIME
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
article

Private Languages

Jeremy Bertomeu
Zenodo (CERN European Organization for Nuclear Research)
Auditing, Earnings Management, Governance
article

Private Languages

Jeremy Bertomeu
article en

Abstract

Strategic communication often relies on anchors observed by the sender but not by the receiver. An analyst may report against a proprietary valuation model, an auditor against an internal score, a manager against an accounting estimate, or an institution against its own standard. I study a sender-receiver game in which reports are costly to move away from such privately observed anchors. Anchor heterogeneity changes the geometry of communication. Rather than relying on partitions, privately anchored reporting generates continuous variation in messages because different senders find different reports costly to make. This mechanism can improve information transmission, but it can also pull reports toward noisy private anchors. I show that (i) small positive reporting costs can make communication approach full revelation, even though zero costs return the model to cheap talk, (ii) uninformative anchors can transmit information through strategic distortions. Anchored reports and cheap-talk messages can co-exist as endogenous hard and soft information, but cheap-talk alone is preferred by all parties under sufficiently low misalignment, explaining why organizations may rely exclusively on informal channels. JEL codes: D82, D83, C72.

Zenodo (CERN European Organization for Nuclear Research)
Washington University in St. Louis (US)
Peace, Justice and strong institutions
Openalex Percentile: Top 2%
Auditing, Earnings Management, Governance
AI Navigator

Ask Laika to Summarize, Analyze, and Connect papers live on the map.

Summarize Papers & Methodologies

Extract key findings, datasets, and comparative methods across publications.

Benchmark Rankings & Visual Analytics

Rank top research institutions, authors, funders, topics, and journals by Field-Weighted Citation Impact (FWCI) and paper volume with instant charts.

Connect Distant Disciplines

Bridge topological clusters on the map to find hidden collaborative intersections.