Cheap Talk with Two Audiences: An Experiment

31 Pages Posted: 12 Dec 2017 Last revised: 28 Jun 2018

See all articles by Mikhail Drugov

Mikhail Drugov

Centre for Economic Policy Research (CEPR); New Economic School (NES)

Roberto Hernan Gonzalez

Université de Bourgogne - Burgundy School of Business; University of Granada

Praveen Kujal

Middlesex University

Marta Troya-Martinez

New Economic School (NES); Centre for Economic Policy Research (CEPR)

Date Written: July 8, 2017

Abstract

In this paper we experimentally test strategic information transmission between one informed and two uninformed agents in a cheap-talk game. We find evidence of the “disciplining” effect of public communication as compared to private; however, it is much weaker than predicted by the theory. Adding a second receiver naturally increases the complexity of strategic thinking when communication is public. Using the level-k model, we exploit the within subject design to show how individuals decrease their level-k in public communication. Surprisingly, we find that individuals become more sophisticated when they communicate privately with two receivers rather than one.

Keywords: Cheap Talk; Communication; Experiment; Level-K; Cognitive Ability; Cognitive Reflection Test

JEL Classification: C72; C92; D83

Suggested Citation

Drugov, Mikhail and Hernan Gonzalez, Roberto and Kujal, Praveen and Troya-Martinez, Marta, Cheap Talk with Two Audiences: An Experiment (July 8, 2017). Available at SSRN: https://ssrn.com/abstract=3086405 or http://dx.doi.org/10.2139/ssrn.3086405

Mikhail Drugov

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

New Economic School (NES) ( email )

100A Novaya Street
Moscow, Skolkovo 143026
Russia

Roberto Hernan Gonzalez

Université de Bourgogne - Burgundy School of Business ( email )

29 rue Sambin
Dijon, 21006
France

University of Granada ( email )

C/Rector López Argueta S/N
Granada, Granada 18071
Spain

Praveen Kujal

Middlesex University ( email )

The Burroughs
London, NW4 4BT
United Kingdom

Marta Troya-Martinez (Contact Author)

New Economic School (NES) ( email )

100A Novaya Street
Moscow, Skolkovo 143026
Russia

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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