Noisy commitments: The impact of information accuracy on efficiency

Eyal Ert () and Andreas Nicklisch ()
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Eyal Ert: Max Wertheimer Minerva Center for Cognitive Research, Faculty of Industrial Engineering and Management, Israeli Institute of Technology, Haifa, Israel
Andreas Nicklisch: Max Planck Institute for Research on Collective Goods, Bonn

No 2006_4, Discussion Paper Series of the Max Planck Institute for Research on Collective Goods from Max Planck Institute for Research on Collective Goods

Abstract: We report an experiment designed to test the influence of noisy commitments on efficiency in a simple bargaining game. We investigate two different levels of commitment reliability in a variant of the peasant-dictator game. Theoretical analysis suggests that the reliability of commitments in this game does not affect efficiency. We find that accurate commitments promote efficiency, as expected by game theory. However, noisy commitments are found to impair efficiency. We explain this effect by the differences between incentives off the equilibrium path under conditions of accurate commitments and noisy commitments. This difference changes the game structure and in the current game facilitates more random responses.

Keywords: Commitments; efficiency; experimental economics; information; trust (search for similar items in EconPapers)
JEL-codes: A12 D02 K00 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2006-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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