Ill-Defined Versus Precise Pre-Play Communication in the Traveler's Dilemma

Posted: 30 Jul 2008

See all articles by Sujoy Chakravarty

Sujoy Chakravarty

Indian Institute of Management (IIM), Ahmedabad

Emmanuel Dechenaux

Kent State University - Department of Economics

Jaideep Roy

Murdoch University

Date Written: July 17, 2008

Abstract

Basu (1994) argues that claims above the Nash equilibrium in the Traveler's Dilemma may be an equilibrium in a model where rational players use reasoning in ill-defined categories. In this model, players may form beliefs over ill-defined strategies such as "choosing a high claim" and best respond to these beliefs with high claims. We investigate this argument in a laboratory experiment with pre-play communication. We find that pre-play communication in ill-defined categories does not help raise claims. Surprisingly, claims are highest when players can communicate using precise numerical messages even though, theoretically, such communication fails to be self-enforcing in this environment.

Keywords: Traveler's Dilemma, Cheap talk, Language of communication

JEL Classification: C72, C92

Suggested Citation

Chakravarty, Sujoy and Dechenaux, Emmanuel and Roy, Jaideep, Ill-Defined Versus Precise Pre-Play Communication in the Traveler's Dilemma (July 17, 2008). Available at SSRN: https://ssrn.com/abstract=1174775

Sujoy Chakravarty

Indian Institute of Management (IIM), Ahmedabad ( email )

Vastrapur
Ahmedabad 380015, Gujarat
India

Emmanuel Dechenaux (Contact Author)

Kent State University - Department of Economics ( email )

Kent, OH 44242
United States

Jaideep Roy

Murdoch University ( email )

South Street
Murdoch 6150, Western Australia
Australia

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