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More Communication, Less Cooperation: Experimental Evidence from Multi-stage Games

  • Andersson, Ola

    ()

    (Department of Economics, Stockholm School of Economics)

  • Wengström, Erik

    ()

    (Department of Economics, Lund University)

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. Pre-play communication only has a significant impact on cooperation when no intraplay communication is possible. The results suggest that the credibility of pre-play messages may depend crucially on future communication opportunities.

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File URL: http://project.nek.lu.se/publications/workpap/Papers/WP07_4.pdf
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Paper provided by Lund University, Department of Economics in its series Working Papers with number 2007:4.

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Length: 29 pages
Date of creation: 21 Feb 2007
Date of revision: 24 Nov 2010
Handle: RePEc:hhs:lunewp:2007_004
Contact details of provider: Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund,Sweden
Phone: +46 +46 222 0000
Fax: +46 +46 2224613
Web page: http://www.nek.lu.se/en

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  1. Blume, A., 1991. "Intra-Play Communication in Repeated Games," Working Papers 91-29, University of Iowa, Department of Economics.
  2. Ellingsen, Tore & Johannesson, Magnus & Lilja, Jannie & Zetterqvist, Henrik, 2006. "Trust and truth," SSE/EFI Working Paper Series in Economics and Finance 665, Stockholm School of Economics.
    • Tore Ellingsen & Magnus Johannesson & Jannie Lilja & Henrik Zetterqvist, 2009. "Trust and Truth," Economic Journal, Royal Economic Society, vol. 119(534), pages 252-276, 01.
  3. Houser, Daniel & Xiao, Erte & McCabe, Kevin & Smith, Vernon, 2008. "When punishment fails: Research on sanctions, intentions and non-cooperation," Games and Economic Behavior, Elsevier, vol. 62(2), pages 509-532, March.
  4. Douglas D. Davis & Charles A. Holt, 1999. "Equilibrium cooperation in two-stage games: Experimental evidence," International Journal of Game Theory, Springer, vol. 28(1), pages 89-109.
  5. Joseph Farrell and Eric Maskin., 1987. "Renegotiation in Repeated Games," Economics Working Papers 8759, University of California at Berkeley.
  6. van Damme, Eric, 1989. "Renegotiation-proof equilibria in repeated prisoners' dilemma," Journal of Economic Theory, Elsevier, vol. 47(1), pages 206-217, February.
  7. Crawford, Vincent, 1998. "A Survey of Experiments on Communication via Cheap Talk," Journal of Economic Theory, Elsevier, vol. 78(2), pages 286-298, February.
  8. Douglas Bernheim, B. & Ray, Debraj, 1989. "Collective dynamic consistency in repeated games," Games and Economic Behavior, Elsevier, vol. 1(4), pages 295-326, December.
  9. Bernheim, B. Douglas & Peleg, Bezalel & Whinston, Michael D., 1987. "Coalition-Proof Nash Equilibria I. Concepts," Journal of Economic Theory, Elsevier, vol. 42(1), pages 1-12, June.
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