Like Me, You Say? a Model and Experiment on Supporting In-Group Bias through Cheaptalk

Abstract

This paper presents a simple application and experimental test of a theoretical model of discriminatory social preferences. First, it establishes conditions under which a specification of “defection aversion” can support an equilibrium in which costless messages engender cooperative strategies in a one-shot Prisoners’ Dilemma (PD) game. The main result is a signaling equilibrium with full separation of signals, and cooperation whenever the social distance is less than a certain threshold level. The second part of the paper is an experimental application and test of a discrete version of the theory. Using the minimal group paradigm, subjects are put into a set of interlocking groups. 116 subjects played 4 games each (within-subjects) under different informational (treatment) contexts. Results are broadly consistent with the theory: people cooperate more when faced with group members. They are also less “honest” with their messages when messages are sequential than when they are simultaneous, which suggests a strategic motivation to the messages. A somewhat unexpected empirical result shows that the threshold social distance supporting cooperation is lower when the group information is based on simultaneous cheap talk than when it is exogenously revealed. Noting that the empirical rates of honest messaging are also rather far from the 100% predicted by the model, a theoretical extension shows that smaller social neighborhoods are in fact a straightforward prediction when the truth of messages is uncertain.