Does communication increase the precision of beliefs?

Lisa Bruttel and Vasilisa Petrishcheva ()
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Vasilisa Petrishcheva: University of Potsdam

No 74, CEPA Discussion Papers from Center for Economic Policy Analysis

Abstract: In this paper, we study one channel through which communication may facilitate cooperative behavior – belief precision. In a prisoner’s dilemma experiment, we show that communication not only makes individuals more optimistic that their partner will cooperate but also increases the precision of this belief, thereby reducing strategic uncertainty. To disentangle the shift in mean beliefs from the increase in precision, we elicit beliefs and precision in a two-stage procedure and in three situations: without communication, before communication, and after communication. We find that the precision of beliefs increases during communication.

Keywords: prisoner’s dilemma; communication; beliefs; strategic uncertainty; experiment (search for similar items in EconPapers)
JEL-codes: C92 D83 (search for similar items in EconPapers)
Date: 2024-03
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-exp and nep-gth
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https://doi.org/10.25932/publishup-62936 (application/pdf)

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Journal Article: Does communication increase the precision of beliefs? (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:pot:cepadp:74

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