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An experimental analysis of multidimensional cheap talk

Listed author(s):
  • Lai, Ernest K.
  • Lim, Wooyoung
  • Wang, Joseph Tao-yi

We design experimental games that capture the logic of Battaglini's (2002) construction of fully revealing equilibrium in multidimensional cheap talk. Two senders transmit information to a receiver over a 2×2 state space. Despite overall misaligned interests, full revelation is achieved in equilibrium by having the senders truthfully reveal along distinct dimensions. Our experimental findings confirm that more information can be extracted with two senders in a multidimensional setting. The extent to which information is transmitted depends on whether dimensional interests are aligned between a sender and the receiver, the sizes of the message spaces, and the specification of out-of-equilibrium beliefs. While inducing interest alignment on the relevant dimensions and restricting the message spaces facilitated equilibrium play and information transmission, having a fully revealing equilibrium that is supported by implausible beliefs reduced the instances in which the equilibrium was played.

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Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 91 (2015)
Issue (Month): C ()
Pages: 114-144

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Handle: RePEc:eee:gamebe:v:91:y:2015:i:c:p:114-144
DOI: 10.1016/j.geb.2015.04.002
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622836

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