The Effects of Pre-Play Communication in a Coordination Game with Incomplete Information
31 Pages Posted: 24 Apr 2018
Date Written: April 2, 2018
The effects of pre-play communication in a coordination game with incomplete information about players’ intensity of preferences are compared to no communication controls. Pre-play communication significantly increases subjects’ payoffs and the probability of coordination, while reducing miscoordination. This results from communication being largely informative, in conjunction with the key prediction of the theory that when two players send different messages, they coordinate on the preferred action of the agent sending the higher message. As predicted, communication becomes more informative as the cost of miscoordination increases.
Keywords: Coordination game, Private information, Pre-play communication, Experiment
JEL Classification: D23, D74, D82
Suggested Citation: Suggested Citation