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Whom are you talking with? An experiment on credibility and communication structure

Author

Listed:
  • Gilles Grandjean
  • Marco Mantovani
  • Ana Mauleon
  • Vincent Vannetelbosch

Abstract

The paper analyzes the role of the structure of communication - i.e. who is talking with whom - on the choice of messages, on their credibility and on actual play. We run an experiment in a three-player coordination game with Pareto ranked equilibria, where a pair of agents has a profitable joint deviation from the Pareto-dominant equilibrium. According to our analysis of credibility, the subjects should communicate and play the Pareto optimal equilibrium only when communication is public. When pairs of agents exchange messages privately, the players should play the Pareto dominated equilibrium and disregard communication. The experimental data conform to our predictions: the agents reach the Pareto-dominant equilibrium only when announcing to play it is credible. When private communication is allowed, lying is prevalent, and players converge to the Pareto-dominated equilibrium. Nevertheless, at the individual level, players’ beliefs and choices tend to react to messages even when these are non-credible.

Suggested Citation

  • Gilles Grandjean & Marco Mantovani & Ana Mauleon & Vincent Vannetelbosch, 2014. "Whom are you talking with? An experiment on credibility and communication structure," SFB 649 Discussion Papers SFB649DP2014-064, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
  • Handle: RePEc:hum:wpaper:sfb649dp2014-064
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    References listed on IDEAS

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    Cited by:

    1. Möllers, Claudia & Normann, Hans-Theo & Snyder, Christopher M., 2016. "Communication in vertical markets: Experimental evidence," DICE Discussion Papers 226, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).

    More about this item

    Keywords

    cheap talk; coordination; coalitions; experiment;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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