For those about to talk we salute you: an experimental study of credible deviations and ACDC
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We test the Average Credible Deviation Criterion (ACDC), a stability measure and refinement for cheap talk equilibria introduced in De Groot Ruiz et al. (Equilibrium selection in cheap talk games: ACDC rocks when other criteria remain silent, Working paper, University of Amsterdam 2012a). ACDC has been shown to be predictive under general conditions and to organize data well in previous experiments meant to test other concepts. In a new experimental setting, we provide the first systematic test of whether and to which degree credible deviations matter for the stability of cheap talk equilibria. Our principal experimental result is that in a setting where existing concepts are silent, credible deviations matter and matter gradually, as predicted by ACDC.
KeywordsCheap talk Refinement Selection Experiment Neologism proofness Announcement proofness ACDC
JEL ClassificationC72 C92 D82 D83
We would like to thank seminar participants at Caltech, New York University and the University of Amsterdam. Financial support from the Dutch Science Foundation (NWO-VICI 453-03-606) and from the Amsterdam Research Priority Area Behavioral Economics is gratefully acknowledged.
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