An Experimental Study of Credible Deviations and ACDC

Adrian de Groot Ruiz, Theo Offerman and Sander Onderstal
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Adrian de Groot Ruiz: Radboud University Nijmegen
Theo Offerman: University of Amsterdam

No 11-153/1, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: We test the Average Credible Deviation Criterion (ACDC), a stability measure and refinement for cheap talk equilibria introduced in De Groot Ruiz, Offerman & Onderstal (2011b). ACDC has been shown to be predictive under general conditions and to organize data well in previous experiments meant to test other concepts. This experiment provides the first systematic test of whether and to which degree credible deviations matter for the stability of cheap talk equilibria. Furthermore, it tests ACDC in a new setting. We also introduce a neologism dynamic to explain the main dynamic characteristics of our data. Our main result is that credible deviations matter and matter gradually, as predicted by ACDC. In addition, our data support the predictions of ACDC in settings where existing concepts are silent. Finally, we test the prediction derived in De Groot Ruiz, Offerman & Onderstal (2011a) about bargaining power and information transmission. We find that, as predicted, less information is transmitted as the Sender's relative power decreases.

Keywords: Cheap Talk; Refinement; Selection; Experiment; Neologism Proofness; Announcement Proofness; ACDC (search for similar items in EconPapers)
JEL-codes: C72 C92 D82 D83 (search for similar items in EconPapers)
Date: 2011-11-03
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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