Credible Communication and Cooperation: Experimental Evidence from Multi-stage Games

Reprint No. 2012:8

Author(s): Ola Andersson and Erik WengströmYear: 2012 Title: Journal of Economic Behavior & Organization Volume (No.): 81 (1) Pages: 207–219
Online article (restrictions may apply)
Preliminary version

It is well known that communication often serves as a facilitator for cooperation in static games. Yet, communication can serve entirely different purposes in dynamic settings as communication during the game may work as a means for renegotiation, potentially undermining the credibility of cooperative strategies. To explore this issue, this paper experimentally investigates cooperation and non-binding communication in a two-stage game. More specifically, two treatments are considered: one with only pre-play communication and one where subjects can also communicate intra-play between the stages of the game. The results highlight a nontrivial difference concerning the effects of preplay communication between the two treatments. Sending or receiving pre-play messages has a positive and significant effect on cooperation if there is no possibility of intra-play communication. However, this effect is significantly reduced when when intra-play communication is allowed. The results suggest that the credibility of pre-play messages may depend crucially on future communication opportunities.

Andersson, Ola and Erik Wengström (2012), "Credible Communication and Cooperation: Experimental Evidence from Multi-stage Games". Journal of Economic Behavior & Organization 81(1), 207–219.

Ola Andersson


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