Gossip and the Efficiency of Interactions

Dietmar Fehr and Matthias Sutter

No 9704, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Human communication in organizations often involves a large amount of gossiping about others. Here we study in an experiment whether gossip affects the efficiency of human interactions. We let subjects play a trust game. Third parties observe a trustee's behavior and can gossip about it by sending a message to the trustor with whom the observed trustee will be paired (for the first time) in the next round. While messages are non-verifiable and sometimes also incorrect, the possibility of gossip is highly efficiency-increasing compared to a situation without any gossip. In two further control treatments, we show that the mere fact of being observed by third parties cannot explain the efficiency-increasing effect of gossip, and that noisy gossip (where information transmission from third parties to trustors can fail) still increases efficiency, but less so than if information transmission is undisturbed.

Keywords: gossip; communication; trust game; experiment; efficiency (search for similar items in EconPapers)
JEL-codes: C72 C92 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2016-02
New Economics Papers: this item is included in nep-exp, nep-gth, nep-hpe and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - published in: Games and Economic Behavior 2019, 113, 448-460.

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Related works:
Journal Article: Gossip and the efficiency of interactions (2019)
Working Paper: Gossip and the Efficiency of Interactions (2016)
Working Paper: Gossip and the efficiency of interactions (2016)
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