Information Transmission under the Shadow of the Future: An Experiment

Alistair Wilson and Emanuel Vespa

American Economic Journal: Microeconomics, 2020, vol. 12, issue 4, 75-98

Abstract: We experimentally examine how information transmission functions in an ongoing relationship. Where the one-shot cheap-talk literature documents substantial overcommunication and preferences for honesty, the outcomes in our repeated setting are more consistent with uninformative babbling outcomes. This is particularly surprising, as honest revelation is supportable as an equilibrium outcome in our repeated setting. We show that inefficient outcomes are driven by a coordination failure on how to distribute the gains from information sharing. However, when agents can coordinate on the payment of an "information rent," honest revelation emerges.

JEL-codes: C92 D83 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (9)

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DOI: 10.1257/mic.20170403

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