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Asymmetric and Endogenous Communication in Competition between Groups

Listed author(s):
  • Timothy N. Cason

    ()

    (Department of Economics, Krannert School of Management, Purdue University)

  • Roman M. Sheremeta

    (Department of Economics, Weatherhead School of Management, Case Western Reserve University)

  • Jingjing Zhang

    (Economics Discipline Group, University of Technology Sydney)

Costless pre-play communication has been shown to effectively facilitate within-group coordination. However, in competitive coordination games, such as rent-seeking contests, better within-group coordination leads to more aggressive competition and lower efficiency. We report an experiment in which two groups compete in a weakest-link contest by expending costly efforts. We find that allowing within-group communication makes groups compete more aggressively. When only one group can communicate, the communicating group coordinates better and expends higher efforts than the non-communicating group. However, the communicating group earns payoffs that are not different from the baseline contest without any communication, while the non-communicating group earns lower payoffs than in this baseline contest. Allowing within-group communication in both groups leads to even more aggressive competition and the lowest payoffs to both groups. Despite such a “harmful” effect of communication, groups vote to endogenously open communication channels even though this leads to lower payoffs and efficiency.

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File URL: http://www.chapman.edu/research-and-institutions/economic-science-institute/_files/WorkingPapers/asymmetric-endogenous-communication.pdf
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Paper provided by Chapman University, Economic Science Institute in its series Working Papers with number 15-01.

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Date of creation: 2015
Handle: RePEc:chu:wpaper:15-01
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