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Credible Communication and Cooperation: Experimental Evidence from Multi-stage Games

Ola Andersson and Erik Wengström ()

No 883, Working Paper Series from Research Institute of Industrial Economics

Abstract: It is well known that communication often serves as a facilitator for cooperation in static games. Yet, communication can serve entirely different purposes in dynamic settings as communication during the game may work as a means for renegotiation, potentially undermining the credibility of cooperative strategies. To explore this issue, this paper experimentally investigates cooperation and non-binding communication in a two-stage game. More specifically, two treatments are considered: one with only pre-play communication and one where subjects can also communicate intra-play between the stages of the game. The results highlight a nontrivial difference concerning the effects of pre-play communication between the two treatments. Pre-play communication only has a significant impact on cooperation when no intra-play communication is possible. The results suggest that the credibility of pre-play messages may depend crucially on future communication opportunities.

Keywords: Communication; Cooperation; Renegotiation; 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-evo, nep-exp, nep-gth and nep-hpe
Date: 2011-09-19
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

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Journal Article: Credible communication and cooperation: Experimental evidence from multi-stage Games (2012) Downloads
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