Pre-play communication with forgone costly messages: experimental evidence on forward induction

Andreas Blume, Peter H. Kriss, Roberto A. Weber

Research output: Contribution to journalArticlepeer-review

6 Scopus citations

Abstract

We experimentally study optional costly communication in Stag-Hunt games. Prior research demonstrates that efficient coordination is difficult without a communication option but obtains regularly with mandatory costless pre-play messages. We find that even small communication costs dramatically reduce message use when communication is optional, but efficient coordination can occur with similar frequency as under costless communication. These findings can be accounted for by formalizations of forward induction that take Nash equilibrium as a reference point (such as Kohlberg and Mertens in Econometrica 54: 1003–1037, 1986; Govindan and Wilson in Econometrica 77: 1–28, 2009), while formalizations that only appeal to (higher-order) knowledge of rationality remain silent in this environment.

Original languageEnglish (US)
Pages (from-to)368-395
Number of pages28
JournalExperimental Economics
Volume20
Issue number2
DOIs
StatePublished - Jun 1 2017

Keywords

  • Communication
  • Coordination
  • Experiment
  • Forward induction
  • Stag hunt

ASJC Scopus subject areas

  • Economics, Econometrics and Finance (miscellaneous)

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