In this paper we experimentally investigate cooperation and non-binding communication in a two-stage game. The game has a subgame perfect equilibrium where subjects can sustain cooperation in the first stage by threatening to punish deviant behavior in the second stage. In contrast, renegotiation-proofness rules out cooperation in the first stage when intra-play communication is possible. Our results provide some support for this argument. We observe less cooperation in the first stage when intra-play communication is possible. Moreover, pre-play communication only has a significant impact on actions when intra-play communication is not allowed. The experimental design also enables us to perform an in-depth analysis of communication.
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Paper provided by Lund University, Department of Economics in its series Working Papers with number
2007:4.
Length: 18 pages Date of creation: 21 Feb 2007 Date of revision: Handle: RePEc:hhs:lunewp:2007_004
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Find related papers by JEL classification: C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
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