Cheap Talk with Multiple Audiences: An Experimental Analysis
Princeton University - Department of Economics; Centre for Economic Policy Research (CEPR)
Princeton University - Department of Economics
CEPR Discussion Paper No. DP8146
We examine strategic information transmission in a controlled laboratory experiment of a cheap talk game with one sender and multiple receivers. We study the change in equilibrium behavior from the addition of another audience as well as from varying the degree of conflict between the sender's and receivers' preferences. We find that, as in cheap talk games with just one receiver, information transmission is higher in games with a separating equilibrium, than in games with only a babbling equilibrium. More interestingly, we find clear evidence that the addition of another audience alters the communication between the sender and the receiver in a way consistent with the theoretical predictions. Deviations from the theoretical predictions that we observe tend to disappear with experience, and learning is faster precisely in the games where deviations are more pronounced.
Number of Pages in PDF File: 37
Keywords: cheap talk, communication, experiment
JEL Classification: C92, D82, D83working papers series
Date posted: December 27, 2010
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