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Communication In Coordination Games




We present experimental evidence on nonbinding, preplay communication in bilateral coordination games. To evaluate the effect of "cheap talk," we consider two communication structures (one-way and two-way communication) and two types of coordination games (one with a cooperative strategy and a second in which one strategy is less "risky"). In games with a cooperative strategy, one-way communication increases play of the Pareto-dominant equilibrium relative to the no communication baseline; two-way communication does not always decrease the frequency of coordination failures. In the second type of game, two-way communication always leads to the Pareto-dominant Nash equilibrium, while one-way communication does not.
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Suggested Citation

  • COOPER, R. & DEJONG, D.V. & FORSYTHE, R. & Tom Ross, 1989. "Communication In Coordination Games," Carleton Industrial Organization Research Unit (CIORU) 89-07, Carleton University, Department of Economics.
  • Handle: RePEc:car:ciorup:89-07

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    References listed on IDEAS

    1. Schankerman, Mark & Nadiri, M. Ishaq, 1986. "A test of static equilibrium models and rates of return to quasi-fixed factors, with an application to the Bell system," Journal of Econometrics, Elsevier, vol. 33(1-2), pages 97-118.
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    4. Richard Levin & Peter C. Reiss, 1984. "Tests of a Schumpeterian Model of R&D and Market Structure," NBER Chapters,in: R&D, Patents, and Productivity, pages 175-208 National Bureau of Economic Research, Inc.
    5. Spence, Michael, 1984. "Cost Reduction, Competition, and Industry Performance," Econometrica, Econometric Society, vol. 52(1), pages 101-121, January.
    6. Evenson, Robert E & Kislev, Yoav, 1973. "Research and Productivity in Wheat and Maize," Journal of Political Economy, University of Chicago Press, vol. 81(6), pages 1309-1329, Nov.-Dec..
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