Noisy commitments: The impact of information accuracy on efficiency
AbstractWe report an experiment designed to test the influence of noisy commitments on efficiency in a simple bargaining game. We investigate two different levels of commitment reliability in a variant of the peasant-dictator game. Theoretical analysis suggests that the reliability of commitments in this game does not affect efficiency. We find that accurate commitments promote efficiency, as expected by game theory. However, noisy commitments are found to impair efficiency. We explain this effect by the differences between incentives off the equilibrium path under conditions of accurate commitments and noisy commitments. This difference changes the game structure and in the current game facilitates more random responses.
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Bibliographic InfoPaper provided by Max Planck Institute for Research on Collective Goods in its series Working Paper Series of the Max Planck Institute for Research on Collective Goods with number 2006_4.
Length: 23 pages
Date of creation: Feb 2006
Date of revision:
Commitments; efficiency; experimental economics; information; trust;
Find related papers by JEL classification:
- A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
- D02 - Microeconomics - - General - - - Institutions: Design, Formation, and Operations
- K00 - Law and Economics - - General - - - General (including Data Sources and Description)
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