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Gossip and the Efficiency of Interactions

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  • Matthias Sutter
  • Dietmar Fehr

Abstract

Human communication in organizations often involves a large amount of gossiping about others. Here we study in an experiment whether gossip affects the efficiency of human interactions. We let subjects play a trust game. Third parties observe a trustee’s behavior and can gossip about it by sending a message to the trustor with whom the observed trustee will be paired (for the first time) in the next round. While messages are non-verifiable and sometimes also incorrect, the possibility of gossip is highly efficiency-increasing compared to a situation without any gossip. In two further control treatments, we show that the mere fact of being observed by third parties cannot explain the efficiency-increasing effect of gossip, and that noisy gossip (where information transmission from third parties to trustors can fail) still increases efficiency, but less so than if information transmission is undisturbed.

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  • Matthias Sutter & Dietmar Fehr, 2016. "Gossip and the Efficiency of Interactions," Working Papers id:9907, eSocialSciences.
  • Handle: RePEc:ess:wpaper:id:9907
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    Cited by:

    1. Greiff, Matthias & Paetzel, Fabian, 2020. "Information about average evaluations spurs cooperation: An experiment on noisy reputation systems," Journal of Economic Behavior & Organization, Elsevier, vol. 180(C), pages 334-356.
    2. Fonseca, Miguel A. & Peters, Kim, 2018. "Will any gossip do? Gossip does not need to be perfectly accurate to promote trust," Games and Economic Behavior, Elsevier, vol. 107(C), pages 253-281.
    3. Zou, Wenbo & Wang, Jinjie & Yan, Jubo, 2022. "Online markets and trust," Journal of Economic Behavior & Organization, Elsevier, vol. 201(C), pages 395-412.
    4. Campbell, Sandy & Gneezy, Uri, 2024. "Smartphone use decreases trustworthiness of strangers," Journal of Economic Psychology, Elsevier, vol. 102(C).

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    More about this item

    Keywords

    human communication; gossip; efficiency; human interactions; third party; control treatment; noisy gossip; information transmission; trust game; efficiency; experiment;
    All these keywords.

    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

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