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Experimental Economics

, Volume 20, Issue 2, pp 368–395 | Cite as

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

  • Andreas Blume
  • Peter H. Kriss
  • Roberto A. Weber
Original Paper

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.

Keywords

Coordination Communication Forward induction Experiment Stag hunt 

JEL Classifications

C72 C92 D83 

Notes

Acknowledgments

We are grateful to the Pittsburgh Experimental Economics Laboratory (PEEL) for access to laboratory resources, to the National Science Foundation (Award SES-1021659) for partially funding this research. Blume’s stay at the Institute for Advanced Study was funded through a Roger W. Ferguson, Jr. and Annette L. Nazareth Membership. We appreciate helpful comments from participants at several seminars and conferences. We are especially thankful to Björn Bartling, Marco Battaglini, Pierpaolo Battigalli, Emiliano Catonini, Alain Cohn, David Cooper, Donja Darai, Ernst Fehr, Drew Fudenberg, Holger Herz, Steven Leider, Robert Östling, Frederic Schneider, Joel Sobel, Alistair Wilson, and Robert Wilson for thoughtful feedback on earlier drafts.

Supplementary material

10683_2016_9487_MOESM1_ESM.pdf (4.6 mb)
Supplementary material 1 (PDF 4758 kb)

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Copyright information

© Economic Science Association 2016

Authors and Affiliations

  • Andreas Blume
    • 1
  • Peter H. Kriss
    • 2
  • Roberto A. Weber
    • 3
  1. 1.Department of EconomicsUniversity of ArizonaTucsonUSA
  2. 2.Medallia, Inc.Palo AltoUSA
  3. 3.Department of EconomicsUniversity of ZurichZurichSwitzerland

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