Advanced Search
MyIDEAS: Login to save this paper or follow this series

Pre-play communication and credibility: A test of Aumann's conjecture

Contents:

Author Info

  • Gary Charness

Abstract

The effectiveness of pre-play communication in achieving efficient outcomes has long been a subject of controversy. In some environments, cheap talk may help to achieve coordination. However, Aumann conjectures that, in a variant of the Stag Hunt game, a signal for efficient play is not self-enforcing and concludes that an "agreement to play [the efficient outcome] conveys no information about what the players will do." Harsanyi and Selten (1988) cite this example as an illustration of risk-dominance vs. payoff-dominance. Farrell and Rabin (1996) agree with the logic, but suspect that cheap talk will nonetheless achieve efficiency. The conjecture is tested with one-way communication. When the sender first chooses a signal and then an action, there is impressive coordination: a 94% probability for the potentially efficient (but risky) play, given a signal for efficient play. Without communication, efforts to achieve efficiency were unsuccessful, as the proportion of B moves is only 35%. I also test a hypothesis that the order of the action and the signal affects the results, finding that the decision order is indeed important. While Aumann’s conjecture is behaviorally disconfirmed when the signal is determined initially, the signal’s credibility seems to be much more suspect when the sender is known to have first chosen an action, and the results are not statistically distinguishable from those when there is no signal. Some applications and issues in communication and coordination are discussed.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.econ.upf.edu/docs/papers/downloads/293.pdf
File Function: Whole Paper
Download Restriction: no

Bibliographic Info

Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 293.

as in new window
Length:
Date of creation: Jun 1998
Date of revision:
Handle: RePEc:upf:upfgen:293

Contact details of provider:
Web page: http://www.econ.upf.edu/

Related research

Keywords: Cheap talk; coordination; credibility; experiment; Leex;

Other versions of this item:

Find related papers by JEL classification:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Bohnet, Iris & Cooter, Robert, 2001. "Expressive Law: Framing or Equilibrium Selection?," Berkeley Olin Program in Law & Economics, Working Paper Series qt5h6970h8, Berkeley Olin Program in Law & Economics.
  2. Manzini, P. & Sadrieh, A. & Vriend, N.J., 2002. "On Smiles, Winks, and Handshakes as Coordination Devices," Discussion Paper 2002-40, Tilburg University, Center for Economic Research.
  3. Antonio Cabrales & Rosemarie Nagel & Roc Armenter, 2007. "Equilibrium selection through incomplete information in coordination games: an experimental study," Experimental Economics, Springer, vol. 10(3), pages 221-234, September.
  4. Baliga, Sandeep & Morris, Stephen, 2002. "Co-ordination, Spillovers, and Cheap Talk," Journal of Economic Theory, Elsevier, vol. 105(2), pages 450-468, August.
  5. Sandeep Baliga & Stephen Morris, 1998. "Cheap Talk and Co-ordination with Payoff Uncertainty," Cowles Foundation Discussion Papers 1203, Cowles Foundation for Research in Economics, Yale University.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:upf:upfgen:293. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.