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Credible communication and cooperation: Experimental evidence from multi-stage Games

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  • Andersson, Ola
  • Wengström, Erik

Abstract

It is well known that communication often serves as a facilitator for cooperation in static games. Yet, communication can serve entirely different purposes in dynamic settings as communication during the game may work as a means for renegotiation, potentially undermining the credibility of cooperative strategies. To explore this issue, this paper experimentally investigates cooperation and non-binding communication in a two-stage game. More specifically, two treatments are considered: one with only pre-play communication and one where subjects can also communicate intra-play between the stages of the game. The results highlight a nontrivial difference concerning the effects of pre-play communication between the two treatments. Sending or receiving pre-play messages has a positive and significant effect on cooperation if there is no possibility of intra-play communication. However, this effect is significantly reduced when when intra-play communication is allowed. The results suggest that the credibility of pre-play messages may depend crucially on future communication opportunities.

Suggested Citation

  • Andersson, Ola & Wengström, Erik, 2012. "Credible communication and cooperation: Experimental evidence from multi-stage Games," Journal of Economic Behavior & Organization, Elsevier, vol. 81(1), pages 207-219.
  • Handle: RePEc:eee:jeborg:v:81:y:2012:i:1:p:207-219
    DOI: 10.1016/j.jebo.2011.10.002
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    1. Montizaan, Raymond & Cörvers, Frank & de Grip, Andries & Dohmen, Thomas, 2012. "Negative Reciprocity and Retrenched Pension Rights," IZA Discussion Papers 6955, Institute for the Study of Labor (IZA).
    2. Christer Andersson & Ola Andersson & Tommy Andersson, 2013. "Sealed bid auctions versus ascending bid auctions: an experimental study," Review of Economic Design, Springer;Society for Economic Design, vol. 17(1), pages 1-16, March.
    3. Gilles Grandjean & Marco Mantovani & Ana Mauleon & Vincent Vannetelbosch, 2014. "Whom are you talking with? An experiment on credibility and communication structure," Working Papers 285, University of Milano-Bicocca, Department of Economics, revised Oct 2014.
    4. Tjaša Bjedov & Thierry Madiès & Marie Claire Villeval, 2016. "Communication And Coordination In A Two-Stage Game," Economic Inquiry, Western Economic Association International, vol. 54(3), pages 1519-1540, July.
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    8. Bell, Andrew & Zhang, Wei & Nou, Keosothea, 2016. "Pesticide use and cooperative management of natural enemy habitat in a framed field experiment," Agricultural Systems, Elsevier, vol. 143(C), pages 1-13.
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    More about this item

    Keywords

    Communication; Cooperation; Renegotiation; Experiments;

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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