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An experimental analysis of multidimensional cheap talk

Ernest K. Lai, Wooyoung Lim () and Joseph Wang ()

Games and Economic Behavior, 2015, vol. 91, issue C, 114-144

Abstract: We design experimental games that capture the logic of Battaglini's (2002) construction of fully revealing equilibrium in multidimensional cheap talk. Two senders transmit information to a receiver over a 2×2 state space. Despite overall misaligned interests, full revelation is achieved in equilibrium by having the senders truthfully reveal along distinct dimensions. Our experimental findings confirm that more information can be extracted with two senders in a multidimensional setting. The extent to which information is transmitted depends on whether dimensional interests are aligned between a sender and the receiver, the sizes of the message spaces, and the specification of out-of-equilibrium beliefs. While inducing interest alignment on the relevant dimensions and restricting the message spaces facilitated equilibrium play and information transmission, having a fully revealing equilibrium that is supported by implausible beliefs reduced the instances in which the equilibrium was played.

Keywords: Strategic information transmission; Multidimensional cheap talk; Fully revealing equilibrium; Robust equilibrium; Laboratory experiment (search for similar items in EconPapers)
JEL-codes: C72 C92 D82 D83 (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1016/j.geb.2015.04.002

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Handle: RePEc:eee:gamebe:v:91:y:2015:i:c:p:114-144