We present experimental evidence on nonbinding, preplay communication in bilateral coordination games. To evaluate the effect of "cheap talk," we consider two communication structures (one-way and two-way communication) and two types of coordination games (one with a cooperative strategy and a second in which one strategy is less "risky"). In games with a cooperative strategy, one-way communication increases play of the Pareto-dominant equilibrium relative to the no communication baseline; two-way communication does not always decrease the frequency of coordination failures. In the second type of game, two-way communication always leads to the Pareto-dominant Nash equilibrium, while one-way communication does not.
|Original language||English (US)|
|Title of host publication||Experiments in Environmental Economics|
|Publisher||Taylor and Francis Inc.|
|Number of pages||34|
|State||Published - Apr 27 2018|
All Science Journal Classification (ASJC) codes
- Social Sciences(all)