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Equilibrium Selection in Experimental Cheap Talk Games

Author

Listed:
  • Adrian de Groot Ruiz

    (Radboud University Nijmegen, the Netherlands)

  • Theo Offerman

    (Amsterdam School of Economics, University of Amsterdam, the Netherlands)

  • Sander Onderstal

    (Amsterdam School of Economics, University of Amsterdam, the Netherlands)

Abstract

Published in 'Games and Economic Behavior' . In the past, many refinements have been proposed to select equilibria in cheap talk games. Usually, these refinements were motivated by a discussion of how rational agents would reason in some particular cheap talk games. In this paper, we propose a new refinement and stability measure that is intended to predict actual behavior in a wide range of cheap talk games. According to our Average Credible Deviation Criterion (ACDC), the stability of an equilibrium is determined by the frequency and size of credible deviations. ACDC organizes the results from several cheap talk experiments in which behavior converged to equilibrium, even in cases where other criteria do not make a prediction.

Suggested Citation

  • Adrian de Groot Ruiz & Theo Offerman & Sander Onderstal, 2015. "Equilibrium Selection in Experimental Cheap Talk Games," Tinbergen Institute Discussion Papers 15-012/VII, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20150012
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    Cited by:

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    2. Siegenthaler, Simon, 2017. "Meet the lemons: An experiment on how cheap-talk overcomes adverse selection in decentralized markets," Games and Economic Behavior, Elsevier, vol. 102(C), pages 147-161.
    3. Konstantinos Ioannidis, 2022. "Habitual Communication," Tinbergen Institute Discussion Papers 22-016/I, Tinbergen Institute.
    4. Sander Onderstal & Yang Yang, 2020. "Cheap-talk Communication in Procurement Auctions: Theory and Experiment," Tinbergen Institute Discussion Papers 20-013/VII, Tinbergen Institute.

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    More about this item

    Keywords

    Cheap talk; Neologism proofness; Credible deviation; Refinement; ACDC; 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
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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