Abstract
We present experimental evidence on nonbinding, preplay communication in bilateral coordination games. To evaluate the effect of “cheap talk,” we consider two communication structures (one-way and two-way communication) and two types of coordination games (one with a cooperative strategy and a second in which one strategy is less “risky”). In games with a cooperative strategy, one-way communication increases play of the Pareto-dominant equilibrium relative to the no communication baseline; two-way communication does not always decrease the frequency of coordination failures. In the second type of game, two-way communication always leads to the Pareto-dominant Nash equilibrium, while one-way communication does not.
Original language | English (US) |
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Pages (from-to) | 739-771 |
Number of pages | 33 |
Journal | Quarterly Journal of Economics |
Volume | 107 |
Issue number | 2 |
DOIs | |
State | Published - May 1992 |
All Science Journal Classification (ASJC) codes
- Economics and Econometrics