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An experimental study of strategicinformation transmission

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Author Info

  • John W. Dickhaut

    (Department of Accounting, Carlson School of Management, University of Minnesota, Minneapolis, MN 55455, USA)

  • Kevin A. McCabe

    (Department of Accounting, Carlson School of Management, University of Minnesota, Minneapolis, MN 55455, USA)

  • Arijit Mukherji

    (Department of Accounting, Carlson School of Management, University of Minnesota, Minneapolis, MN 55455, USA)

Abstract

We examine strategic information transmission in an experiment. Senders are privately informed about a state. They send messages to Receivers, who choose actions resulting in payoffs to Senders and Receivers. The payoffs depend on the action and the state. We vary the degree to which the Receivers'and the Senders'preferences diverge. We examine the relationship between the Senders'messages and the true state as well as that between actions and the true state and contrast the ability of different equilibrium message sets to explain the data. When preferences are closely aligned Senders disclose more. We assess two comparative statics: (i) as preferences diverge, state and action are less frequently matched, and (ii) messages tend to become less informative as preferences diverge. The first result is weakly confirmed for adjacent treatments but is considerably stronger when non-adjacent treatments are compared. We find that as preferences diverge messages become less informative. While the ex-ante Pareto-optimal Bayesian Nash Equilibrium does not explain our conditions, the equilibrium message sets supported by the data are similar to the ex-ante Pareto Optimal message sets.

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Bibliographic Info

Article provided by Springer in its journal Economic Theory.

Volume (Year): 6 (1995)
Issue (Month): 3 ()
Pages: 389-403

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Handle: RePEc:spr:joecth:v:6:y:1995:i:3:p:389-403

Note: Received: July 1, 1993; revised version May 18, 1994
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Cited by:
  1. Mehmet Y. Gurdal & Ayca Ozdogan & Ismail Saglam, 2011. "Truth-Telling and Trust in Sender-Receiver Games with Intervention," Working Papers 1106, TOBB University of Economics and Technology, Department of Economics.
  2. Adrian de Groot Ruiz & Theo Offerman & Sander Onderstal, 2011. "An Experimental Study of Credible Deviations and ACDC," Tinbergen Institute Discussion Papers 11-153/1, Tinbergen Institute.
  3. Duffy, Sean & Hartwig, Tyson & Smith, John, 2010. "Costly and discrete communication: An experimental investigation," MPRA Paper 24148, University Library of Munich, Germany.
  4. Blume, A. & De Jong, D.V. & Kim, Y.G. & Sprinkle, G.B., 1994. "Evolution of the Meaning of Messages in Sender-Receiver Games: An Experiment," Papers 9491, Tilburg - Center for Economic Research.
  5. Rode, Julian, 2007. "Truth and Trust in Communication: An Experimental Study of Behavior under Asymmetric Information," Ratio Working Papers 111, The Ratio Institute.
  6. Toshiji Kawagoe & Hirokazu Takizawa, 2005. "Why Lying Pays: Truth Bias in the Communication with Conflicting Interests," Discussion papers 05018, Research Institute of Economy, Trade and Industry (RIETI).
  7. Sanchez-Pages, Santiago & Vorsatz, Marc, 2007. "An experimental study of truth-telling in a sender-receiver game," Games and Economic Behavior, Elsevier, vol. 61(1), pages 86-112, October.
  8. Marco Ottaviani & Francesco Squintani, 2006. "Naive audience and communication bias," International Journal of Game Theory, Springer, vol. 35(1), pages 129-150, December.
  9. Joseph Tao-yi Wang & Michael Spezio & Colin F. Camerer, 2006. "Pinocchio's Pupil: Using Eyetracking and Pupil Dilation to Understand Truth-telling and Deception in Games," Levine's Bibliography 321307000000000042, UCLA Department of Economics.
  10. Santiago Sanchez-Pages & Marc Vorsatz, 2007. "Enjoy the Silence: An Experiment on Truth-Telling," ESE Discussion Papers 155, Edinburgh School of Economics, University of Edinburgh.
  11. Ederer, Florian & Fehr, Ernst, 2007. "Deception and Incentives: How Dishonesty Undermines Effort Provision," IZA Discussion Papers 3200, Institute for the Study of Labor (IZA).
  12. Toshiji Kawagoe & Hirokazu Takizawa, 2005. "Why Lying Pays: Truth Bias in the Communication with Conflicting Interests," Experimental 0503005, EconWPA.
  13. Timothy Shields, 2008. "Analysts, Incentives, and Exaggeration," CIRANO Working Papers 2008s-11, CIRANO.

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