Whom are You Talking with? An Experiment on Credibility and Communication Structure

48 Pages Posted: 21 Oct 2014

See all articles by Gilles Grandjean

Gilles Grandjean

Université catholique de Louvain

Marco Mantovani

Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS); Facultés Universitaires Saint Louis à Bruxelles - CEREC

Ana Mauleon

Catholic University of Louvain (UCL)

Vincent Vannetelbosch

Catholic University of Louvain (UCL)

Multiple version iconThere are 2 versions of this paper

Date Written: October 21, 2014

Abstract

The paper analyzes the role of the structure of communication -- i.e., who is talking with whom -- on the choice of messages, on their credibility and on actual play. We run an experiment in a three-player coordination game with Pareto ranked equilibria, where a pair of agents has a profitable joint deviation from the Pareto-dominant equilibrium. According to our analysis of credibility, the subjects should communicate and play the Pareto optimal equilibrium only when communication is public. When pairs of agents exchange messages privately, the players should play the Pareto dominated equilibrium and disregard communication. The experimental data conform to our predictions: the agents reach the Pareto-dominant equilibrium only when announcing to play is credible. When private communication is allowed, lying is prevalent, and players converge to the Pareto-dominated equilibrium. Nevertheless, at the individual level, players’ beliefs and choices tend to react to messages even when these are non-credible.

Keywords: cheap talk, coordination, coalitions, experiment

JEL Classification: C72, C91, D03, D83

Suggested Citation

Grandjean, Gilles and Mantovani, Marco and Mauleon, Ana and Vannetelbosch, Vincent, Whom are You Talking with? An Experiment on Credibility and Communication Structure (October 21, 2014). University of Milan Bicocca Department of Economics, Management and Statistics Working Paper No. 285. Available at SSRN: https://ssrn.com/abstract=2512662 or http://dx.doi.org/10.2139/ssrn.2512662

Gilles Grandjean

Université catholique de Louvain ( email )

Place Montesquieu, 3
Louvain-la-Neuve, 1348
Belgium

Marco Mantovani (Contact Author)

Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS) ( email )

Piazza dell'Ateneo Nuovo, 1
Milan, 20126
Italy

Facultés Universitaires Saint Louis à Bruxelles - CEREC ( email )

Brussels, 1000
Belgium
+32 2 7923551 (Phone)

Ana Mauleon

Catholic University of Louvain (UCL)

Place Montesquieu, 3
Louvain-la-Neuve, 1348
Belgium

Vincent Vannetelbosch

Catholic University of Louvain (UCL) ( email )

CORE, Voie du Roman Pays 34
Louvain-la-Neuve, 1348
Belgium

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