Communication and Renegotiation in Two-stage Games

Ola Andersson and Erik Wengström ()

No 2007:4, Working Papers from Lund University, Department of Economics

Abstract: In this paper we experimentally investigate cooperation and non-binding communication in a two-stage game. The game has a subgame perfect equilibrium where subjects can sustain cooperation in the first stage by threatening to punish deviant behavior in the second stage. In contrast, renegotiation-proofness rules out cooperation in the first stage when intra-play communication is possible. Our results provide some support for this argument. We observe less cooperation in the first stage when intra-play communication is possible. Moreover, pre-play communication only has a significant impact on actions when intra-play communication is not allowed. The experimental design also enables us to perform an in-depth analysis of communication.

Keywords: Renegotiation; Communication; Cooperation; Experiments (search for similar items in EconPapers)
JEL-codes: C72 C92 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-gth
Date: 2007-02-21
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Persistent link: http://EconPapers.repec.org/RePEc:hhs:lunewp:2007_004

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