Transparency is Overrated: Communicating in a Coordination Game with Private Information

51 Pages Posted: 9 Oct 2017

See all articles by Antonio Cabrales

Antonio Cabrales

University College London - Department of Economics

Michalis Drouvelis

University of Birmingham - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute

Zeynep Gurguc

Imperial College London

Indrajit Ray

Cardiff University - Cardiff Business School - Economics Section

Date Written: October 2017

Abstract

We consider an experiment with a version of the Battle of the Sexes game with two-sided private information, allowing a possible round of either one-way or two-way cheap talk before the game is played. We compare different treatments to study truthful revelation of information and subsequent payoffs from the game. We find that the players are overall truthful about their types in the cheap-talk phase in both one-way or two-way talk. Furthermore, the unique symmetric cheap-talk equilibrium in the two-way cheap talk game is played when they players fully reveal their information; however, they achieve higher payoffs in the game when the talk is one-way as the truthful reports facilitate desired coordination.

Keywords: Battle of the Sexes, cheap talk, coordination, private information

JEL Classification: C72, C92, D83

Suggested Citation

Cabrales, Antonio and Drouvelis, Michalis and Gurguc, Zeynep and Ray, Indrajit, Transparency is Overrated: Communicating in a Coordination Game with Private Information (October 2017). CEPR Discussion Paper No. DP12353. Available at SSRN: https://ssrn.com/abstract=3049910

Antonio Cabrales (Contact Author)

University College London - Department of Economics ( email )

Drayton House, 30 Gordon Street
30 Gordon Street
London, WC1H 0AX
United Kingdom

Michalis Drouvelis

University of Birmingham - Department of Economics ( email )

Economics Department
Birmingham, B15 2TT
United Kingdom

HOME PAGE: http://sites.google.com/site/michalisdrouvelis/

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschinger Str. 5
Munich, 01069
Germany

Zeynep Gurguc

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

Indrajit Ray

Cardiff University - Cardiff Business School - Economics Section ( email )

Cardiff CF10 3EU
United Kingdom

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