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Journal of Economic Behavior & Organization

Credible Communication and Cooperation: Experimental Evidence from Multi–Stage Games

Scientific Article in English
Reference
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. doi.org/10.1016/j.jebo.2011.10.002

Authors
Ola Andersson, Erik Wengström

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.