EconPapers    
Economics at your fingertips  
 

Authority and communication in the laboratory

Ernest K. Lai and Wooyoung Lim ()

Games and Economic Behavior, 2012, vol. 74, issue 2, 541-560

Abstract: We report findings from experiments on two delegation–communication games. An uninformed principal chooses whether to fully delegate her decision-making authority to an informed agent or to retain the authority and communicate with the agent via cheap talk to obtain decision-relevant information. In the game in which the delegation outcome is payoff-dominated by both the truthful and the babbling communication outcomes, we find that principal-subjects almost always retain their authority and agent-subjects communicate truthfully. Significantly more choices of delegation than of communication are observed in another game in which the delegation outcome payoff-dominates the unique babbling communication outcome; yet there is a non-negligible fraction of principal-subjects who holds on to their authority and agent-subjects who transmits some information. A level-k analysis of the game indicates that a principal-subject “under-delegates” due to the belief that her less-than-fully-strategic opponent will provide information; such belief is in turn consistent with the actual play.

Keywords: Cheap-talk communication; Decision-making authority; Delegation; Laboratory experiment; Level-k model (search for similar items in EconPapers)
JEL-codes: C72 C92 D82 D83 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0899825611001345
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:74:y:2012:i:2:p:541-560

DOI: 10.1016/j.geb.2011.08.006

Access Statistics for this article

Games and Economic Behavior is currently edited by E. Kalai

More articles in Games and Economic Behavior from Elsevier
Bibliographic data for series maintained by Haili He ().

 
Page updated 2020-11-11
Handle: RePEc:eee:gamebe:v:74:y:2012:i:2:p:541-560