Is It What You Say or How You Say It?

58 Pages Posted: 13 Apr 2022

See all articles by Xiangdong Qin

Xiangdong Qin

Shanghai Jiao Tong University (SJTU)

Siyu Wang

Wichita State University - W. Frank Barton School of Business - Department of Economics

Mike Zhiren Wu

Monash University - Department of Economics

Date Written: April 2, 2022

Abstract

Studies show that free-form communication facilitates cooperation better than restricted communication. We investigate the reasons for this by comparing various communication protocols in a sequential game where the buyer sets the price and then the seller determines the quality. At the beginning of the game, the seller is allowed to send the buyer a restricted promise, a restricted threat, a free-form message, or a message selected from a set of previously constructed free-form messages. We find that (i) a restricted threat is ineffective but a restricted promise significantly promotes cooperation; (ii) a free-form message promotes cooperation more than a restricted promise whereas a selected free-form message does so as effectively as a restricted promise; (iii) a free-form message frequently raises notions of promise and honesty, and thus enhances cooperation; and (iv) a constructed message is more effective than a selected message in fostering cooperation. Our results indicate that the self-constructed nature of free-form communication underlies its superiority to restricted communication for the promotion of cooperation.

Keywords: communication, promise, threat, cooperation, commitment

JEL Classification: C92, D83

Suggested Citation

Qin, Xiangdong and Wang, Siyu and Wu, Mike Zhiren, Is It What You Say or How You Say It? (April 2, 2022). Available at SSRN: https://ssrn.com/abstract=4073705 or http://dx.doi.org/10.2139/ssrn.4073705

Xiangdong Qin

Shanghai Jiao Tong University (SJTU)

KoGuan Law School
Shanghai 200030, Shanghai 200052
China

Siyu Wang (Contact Author)

Wichita State University - W. Frank Barton School of Business - Department of Economics ( email )

Wichita, KS 67260-0078
United States

Mike Zhiren Wu

Monash University - Department of Economics ( email )

Australia

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