Pre-Play communication with forgone costly messages: experimental evidence on forward induction

Andreas Blume, Peter H. Kriss and Roberto Weber

No 34, ECON - Working Papers from Department of Economics - University of Zurich

Abstract: We study communication in a two-player coordination game with Pareto-ranked equilibria. Prior research demonstrates that efficient coordination is difficult without communication but obtains regularly with (mandatory) costless pre-play messages. In a laboratory experiment, we modify communication by making the sending of messages optional and costly. Even small costs dramatically reduce message use, but efficient coordination of actions occurs with similar frequency to that observed under costless communication. Our results can be accounted for by Govindan and Wilson's formalization of forward induction (GW-FI), which selects, among the pure-strategy equilibrium outcomes, the one in which efficiency is achieved without communication. Consistent with the introspective character of GW-FI, the fraction of players who achieve efficient coordination by forgoing the use of reasonably costly optional messages is substantial from the first period, is remarkably stable at that level, and is not significantly affected by learning.

Keywords: Coordination; communication; forward induction; experiment; stag hunt (search for similar items in EconPapers)
JEL-codes: C72 C92 D83 (search for similar items in EconPapers)
Date: 2011-10, Revised 2014-09
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-gth and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Pre-play communication with forgone costly messages: experimental evidence on forward induction (2017)
Working Paper: Pre-Play Communication with Forgone Costly Messages: Experimental Evidence on Forward Induction (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:zur:econwp:034

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