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An experimental analysis of multidimensional cheap talk

Author

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  • Lai, Ernest K.
  • Lim, Wooyoung
  • Wang, Joseph Tao-yi

Abstract

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.

Suggested Citation

  • Lai, Ernest K. & Lim, Wooyoung & Wang, Joseph Tao-yi, 2015. "An experimental analysis of multidimensional cheap talk," Games and Economic Behavior, Elsevier, vol. 91(C), pages 114-144.
  • Handle: RePEc:eee:gamebe:v:91:y:2015:i:c:p:114-144
    DOI: 10.1016/j.geb.2015.04.002
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Battaglini, Marco & Lai, Ernest & Lim, Wooyoung & Tao-yi Wang, Joseph, 2016. "The Informational Theory of Legislative Committees: An Experimental Analysis," CEPR Discussion Papers 11356, C.E.P.R. Discussion Papers.
    2. Lu, Shih En, 2017. "Coordination-free equilibria in cheap talk games," Journal of Economic Theory, Elsevier, vol. 168(C), pages 177-208.
    3. Margaret Meyer & Ines Moreno de Barreda & Julia Nafziger, 2016. "Robustness of Full Revelation in Multisender Cheap Talk," Economics Series Working Papers 789, University of Oxford, Department of Economics.
    4. Ertac, Seda & Koçkesen, Levent & Ozdemir, Duygu, 2016. "The role of verifiability and privacy in the strategic provision of performance feedback: Theory and experimental evidence," Games and Economic Behavior, Elsevier, vol. 100(C), pages 24-45.

    More about this item

    Keywords

    Strategic information transmission; Multidimensional cheap talk; Fully revealing equilibrium; Robust equilibrium; Laboratory experiment;

    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
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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