Cheap Talk with Two Audiences: An Experiment
31 Pages Posted: 12 Dec 2017 Last revised: 28 Jun 2018
Date Written: July 8, 2017
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: Suggested Citation