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When Does Communication Improve Coordination?

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  • Tore Ellingsen
  • Robert �stling

Abstract

We study costless pre-play communication of intentions among inexperienced players. Using the level-k model of strategic thinking to describe players' beliefs, we fully characterize the effects of preplay communication in symmetric 2x2 games. One-way communication weakly increases coordination on Nash equilibrium outcomes, although average payoffs sometimes decrease. Two-way communication further improves payoffs in some games but is detrimental in others. Moving beyond the class of symmetric 2x2 games, we find that communication facilitates coordination in common interest games with positive spillovers and strategic complementarities, but there are also games in which any type of communication hampers coordination. (JEL C72, D83)

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 100 (2010)
Issue (Month): 4 (September)
Pages: 1695-1724

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Handle: RePEc:aea:aecrev:v:100:y:2010:i:4:p:1695-1724

Note: DOI: 10.1257/aer.100.4.1695
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Citations

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Cited by:
  1. Andersson, Ola & Wengström, Erik, 2012. "Credible communication and cooperation: Experimental evidence from multi-stage Games," Journal of Economic Behavior & Organization, Elsevier, vol. 81(1), pages 207-219.
  2. Mohlin, Erik, 2012. "Evolution of theories of mind," Games and Economic Behavior, Elsevier, vol. 75(1), pages 299-318.
  3. Crettez, Bertrand & Deloche, Régis, 2013. "On experimental economics and the comparison between the last two versions of Molière's Tartuffe," Journal of Economic Behavior & Organization, Elsevier, vol. 87(C), pages 66-72.
  4. Vincent P. Crawford & Miguel A. Costa-Gomes & Nagore Iriberri, 2010. "Strategic Thinking," Levine's Working Paper Archive 661465000000001148, David K. Levine.
  5. Serra Garcia, M. & Damme, E.E.C. van & Potters, J.J.M., 2010. "Which Words Bond? An Experiment on Signaling in a Public Good Game (replaced by CentER DP 2011-139)," Discussion Paper 2010-33, Tilburg University, Center for Economic Research.
  6. Kawagoe, Toshiji & Takizawa, Hirokazu, 2012. "Level-k analysis of experimental centipede games," Journal of Economic Behavior & Organization, Elsevier, vol. 82(2), pages 548-566.
  7. Miettinen, Topi, 2013. "Promises and conventions – An approach to pre-play agreements," Games and Economic Behavior, Elsevier, vol. 80(C), pages 68-84.
  8. Andreas Blume, 2011. "The Dog That Did Not Bark: Pre-Play Communication with Foregone Costly Messages," Working Papers 438, University of Pittsburgh, Department of Economics, revised Jan 2011.
  9. Dietrichson, Jens & Jochem, Torsten, 2014. "Organizational Coordination and Costly Communication with Boundedly Rational Agents," Working Papers 2014:2, Lund University, Department of Economics.
  10. Lai, Ernest K. & Lim, Wooyoung, 2012. "Authority and communication in the laboratory," Games and Economic Behavior, Elsevier, vol. 74(2), pages 541-560.
  11. Dietmar Fehr, 2011. "The Persistence of "Bad" Precedents and the Need for Communication: A Coordination Experiment," SFB 649 Discussion Papers SFB649DP2011-039, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
  12. Schlag, Karl H. & Vida, Péter, 2013. "Commitments, Intentions, Truth and Nash Equilibria," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 438, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.

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