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Does communication increase the precision of beliefs?

Author

Listed:
  • Lisa Bruttel

    (University of Potsdam, CEPA)

  • Vasilisa Petrishcheva

    (University of Potsdam)

Abstract

In this paper, we study one channel through which communication may facilitate cooperative behavior – belief precision. In a prisoner’s dilemma experiment, we show that communication not only makes individuals more optimistic that their partner will cooperate but also increases the precision of this belief, thereby reducing strategic uncertainty. To disentangle the shift in mean beliefs from the increase in precision, we elicit beliefs and precision in a two-stage procedure and in three situations: without communication, before communication, and after communication. We find that the precision of beliefs increases during communication.

Suggested Citation

  • Lisa Bruttel & Vasilisa Petrishcheva, 2024. "Does communication increase the precision of beliefs?," CEPA Discussion Papers 74, Center for Economic Policy Analysis.
    • Handle: RePEc:pot:cepadp:74
    DOI: 10.25932/publishup-62936
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    References listed on IDEAS

    as
    1. Stefan T. Trautmann & Gijs Kuilen, 2015. "Belief Elicitation: A Horse Race among Truth Serums," Economic Journal, Royal Economic Society, vol. 125(589), pages 2116-2135, December.
    2. Charles A. Holt & Angela M. Smith, 2016. "Belief Elicitation with a Synchronized Lottery Choice Menu That Is Invariant to Risk Attitudes," American Economic Journal: Microeconomics, American Economic Association, vol. 8(1), pages 110-139, February.
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    More about this item

    Keywords

    prisoner’s dilemma; communication; beliefs; strategic uncertainty; experiment;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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