The effects of costless pre-play communication: Experimental evidence from games with Pareto-ranked equilibria

Andreas Blume, Andreas Ortmann

Research output: Contribution to journalArticlepeer-review

117 Scopus citations

Abstract

Cheap talk is shown to facilitate coordination on the unique efficient equilibrium in experimental order-statistic games. This result is roughly consistent with theoretical predictions according to which cheap talk promotes efficient Nash play. The evidence concerning the mechanisms that theory appeals to is mixed: Frequent agreement of messages and actions is consistent with messages being viewed as self-committing. Risk in the underlying game and the absence of self-signaling messages may explain why message profiles are not unanimous. Time-varying message profiles can be interpreted as evidence for players trying to negotiate equilibria and/or trying to rely on secret handshakes.

Original languageEnglish (US)
Pages (from-to)274-290
Number of pages17
JournalJournal of Economic Theory
Volume132
Issue number1
DOIs
StatePublished - Jan 2007

Keywords

  • Cheap talk
  • Coordination games
  • Experiments
  • Order-statistic games

ASJC Scopus subject areas

  • Economics and Econometrics

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