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The Role of Theory of Mind and “Small Talk” Communication in Strategic Decision-Making

Author

Listed:
  • Bose, Neha

    (University of Warwick)

  • Sgroi, Daniel

    (University of Warwick)

Abstract

Humans routinely chat with each other about many things like the news, weather or sports. In important decision-making settings, informal communication of this sort (so-called “small talk”) has been largely dismissed by social scientists as wasteful and strategically empty. We provide new evidence that this is far from true: after a 4- minute conversation, subjects developed a sense of the personality of others which in a pre-registered RCT resulted in significantly different behaviour in future interactions. They contributed more in public good games and found it more difficult to out-guess opponents they felt were like themselves. We explain this behaviour, and using textanalysis, measure the direct impact of differences in language: for example, talking more made subjects seem more pro-social, engendering pro-social behaviour in others.

Suggested Citation

  • Bose, Neha & Sgroi, Daniel, 2019. "The Role of Theory of Mind and “Small Talk” Communication in Strategic Decision-Making," CAGE Online Working Paper Series 409, Competitive Advantage in the Global Economy (CAGE).
    • Handle: RePEc:cge:wacage:409
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    File URL: https://warwick.ac.uk/fac/soc/economics/research/centres/cage/manage/publications/409-2019_sgroi.pdf
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    References listed on IDEAS

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    Cited by:

    1. Buchanan, Joy A., 2020. "My reference point, not yours," Journal of Economic Behavior & Organization, Elsevier, vol. 171(C), pages 297-311.

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    More about this item

    Keywords

    theory of mind; cheap talk; communication; level-k reasoning; public goods game; cooperation; extraversion; perceived similarity; self-projection bias; laboratory experiment; text analysis. JEL Classification: D91; D83; C92.;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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