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

Core Discussion Paper, 2014/42

50 Pages Posted: 23 Nov 2016

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

Université Saint-Louis - Bruxelles; Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE)

Vincent J. Vannetelbosch

Center for Operations Research and Econometrics (CORE)

Multiple version iconThere are 2 versions of this paper

Date Written: November 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 pair 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 it 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 noncredible.

Keywords: cheap-talk communication; coordination; coalition-proof Nash equilibrium; laboratory experiment

JEL Classification: C72, C91, D03, D83

Suggested Citation

Grandjean, Gilles and Mantovani, Marco and Mauleon Echeverria, Ana Carmen and Vannetelbosch, Vincent J., Whom are You Talking With? An Experiment on Credibility and Communication Structure (November 21, 2014). Core Discussion Paper, 2014/42. Available at SSRN: https://ssrn.com/abstract=2873496 or http://dx.doi.org/10.2139/ssrn.2873496

Gilles Grandjean

Université catholique de Louvain ( email )

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

Marco Mantovani

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 Carmen Mauleon Echeverria (Contact Author)

Université Saint-Louis - Bruxelles ( email )

Brussels, 1000
Belgium

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE) ( email )

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

Vincent J. Vannetelbosch

Center for Operations Research and Econometrics (CORE) ( email )

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

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