 Investing in communication: An experimental study of communication in a relational contract settingJournal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), 2018, vol. 74, issue C, 85-96 Abstract: I use laboratory experiments to examine the effect of truthful and cheap communication in a relational contracting setting. Specifically, I examine two communication types: one in which subjects can send both untruthful and truthful messages, and another in which only truthful messages may be sent. The results indicate ability to send truthful messages—compared to no messages—improves quality traded, ultimately leading to higher social surplus and lower income inequality. When truthfulness is not required, trade volume does not increase, nor does quality traded improve. However, I find in this case buyers also are less likely to defect on bonus payments. The results have implications for the development and improvement of communication platforms designed to improve trading outcomes. This is especially true as a larger portion of transactions move online, shifting the nature of communication. Keywords: Communication; Relational contracting; Experimental economics (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:soceco:v:74:y:2018:i:c:p:85-96 DOI: 10.1016/j.socec.2018.03.008 Access Statistics for this article Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics) is currently edited by Pablo Brañas Garza More articles in Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics) from Elsevier |
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