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Communication in Context: Interpreting Promises in an Experiment on Competition and Trust

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  • Casella, Alessandra
  • Kartik, Navin
  • Sanchez, Luis
  • Turban, Sébastien

Abstract

How much do people lie, and how much do people trust communication when lying is possible? An important step towards answering these questions is understanding how communication is interpreted. This paper establishes in a canonical experiment that competition can alter the shared communication code: the commonly understood meaning of messages. We study a Sender-Receiver game in which the Sender dictates how to share $10 with the Receiver, if the Receiver participates. The Receiver has an outside option and decides whether to participate after receiving a non-binding offer from the Sender. Competition for play between Senders leads to higher offers but has no effect on actual transfers, expected transfers, or Receivers' willingness to play. The higher offers signal that sharing will be equitable without the expectation that they should be followed literally: under competition "6 is the new 5".

Suggested Citation

  • Casella, Alessandra & Kartik, Navin & Sanchez, Luis & Turban, Sébastien, 2018. "Communication in Context: Interpreting Promises in an Experiment on Competition and Trust," CEPR Discussion Papers 12709, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:12709
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    References listed on IDEAS

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    1. Jacob Goeree & Jingjing Zhang, 2014. "Communication & competition," Experimental Economics, Springer;Economic Science Association, vol. 17(3), pages 421-438, September.
    2. David Sally, 2002. "`What an Ugly Baby!'," Rationality and Society, , vol. 14(1), pages 78-108, February.
    3. Joseph Farrell & Matthew Rabin, 1996. "Cheap Talk," Journal of Economic Perspectives, American Economic Association, vol. 10(3), pages 103-118, Summer.
    4. Charness, Gary & Dufwenberg, Martin, 2003. "Promises & Partnership," Research Papers in Economics 2003:3, Stockholm University, Department of Economics.
    5. Stefano Demichelis & Jorgen W. Weibull, 2008. "Language, Meaning, and Games: A Model of Communication, Coordination, and Evolution," American Economic Review, American Economic Association, vol. 98(4), pages 1292-1311, September.
    6. Gary Charness & Martin Dufwenberg, 2006. "Promises and Partnership," Econometrica, Econometric Society, vol. 74(6), pages 1579-1601, November.
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    Cited by:

    1. Sorravich Kingsuwankul & Chloe Tergiman & Marie Claire Villeval, 2023. "Why do oaths work? Image concerns and credibility in promise keeping," Working Papers hal-04209489, HAL.
    2. Albertazzi, Andrea & Ploner, Matteo & Vaccari, Federico, 2021. "Welfare in Experimental News Markets," SocArXiv 5j2w8, Center for Open Science.
    3. Lang, Matthias & Schudy, Simeon, 2023. "(Dis)honesty and the value of transparency for campaign promises," European Economic Review, Elsevier, vol. 159(C).
    4. Antinyan, Armenak & Corazzini, Luca & D'Agostino, Elena & Pavesi, Filippo, 2023. "Watch your words: An experimental study on communication and the opportunity cost of delegation," Journal of Economic Behavior & Organization, Elsevier, vol. 214(C), pages 216-232.
    5. Florian Ederer & Fr'd'ric Schneider, 2018. "The Persistent Power of Promises," Cowles Foundation Discussion Papers 2129R, Cowles Foundation for Research in Economics, Yale University, revised May 2019.

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    More about this item

    Keywords

    Bargaining; Cheap talk; Lying; Dictator game; Trust game; Guilt-aversion;
    All these keywords.

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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