Pre-play Communication Research Articles

Credible communication and cooperation: Experimental evidence from multi-stage Games

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 pre-play 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.

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

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 pre-play communication between the two treatments. Pre-play communication only has a significant impact on cooperation when no intra-play communication is possible. The results suggest that the credibility of pre-play messages may depend crucially on future communication opportunities.

An Experimental Investigation of Electoral Delegation and the Provision of Public Goods

How effectively do democratic institutions provide public goods? Despite the incentives an elected leader has to free ride or impose majority tyranny, our experiment demonstrates that electoral delegation results in full provision of the public good. Analysis of the experimental data suggests that the result is primarily due to electoral selection: groups elect prosocial leaders and replace those who do not implement full contribution outcomes. However, we also observe outcomes in which a minimum winning coalition exploits the contributions of the remaining players. A second experiment demonstrates that when electoral delegation must be endogenously implemented, individuals voluntarily cede authority to an elected agent only when preplay communication is permitted. Our combined results demonstrate that democratic delegation helps groups overcome the free‐rider problem and generally leads to outcomes that are often both efficient and equitable.

Guilt Aversion Revisited: An Experimental Test of a New Model

In this paper, we experimentally investigate the guilt aversion hypothesis by using a trust game with pre-play communication. For this purpose, we first develop a new version of guilt aversion. It is shown that this new version provides a more refined equilibrium prediction than an existing version does. In addition, the new version is consistent with extant experimental results in the literature and thus cannot be rejected by any of them. Given these observations, we then design an experiment that can test the new as well as original versions of the guilt aversion hypothesis. In contrast to the prediction of both versions of the hypothesis, we find that the correlation between elicited beliefs and (trustful or trustworthy) behavior is almost zero even in an environment with pre-play communication. Thus, our experimental result provides a case against the guilt aversion hypothesis.

Communication and fair distribution

The paper analyses the impact of communication about fairness on individual distribution decisions, and it focuses on three fairness ideals; strict egalitarianism, liberal egalitarianism, and libertarianism. A dictator game experiment with production and two treatments, one with and one without pre-play communication, is run. In the communication phase the individuals face three hypothetical distribution situations involving three fairness ideals. They are asked to choose the fairness ideal they think will imply the fairest distribution in the hypothetical situations. The decision is communicated to the opponents in the distribution phase.The study compares data from the two treatments and tests if communication about fairness has an effect, and how this effect works. Three models of how communication affects distribution are estimated; the integrity model, the compromise model and the self-serving model. The information exchange has an impact on both the weight individuals attach to fairness considerations and on their overall fairness considerations. The weight individuals attach to fairness considerations increases and there is a certain degree of heterogeneity in the population with respect to how most people process information.

Coordination, Efficiency and Pre-Play Communication with Forgone Costly Messages

We study communication in a two-player coordination game with Pareto-ranked equilibria. Prior research demonstrates that efficient coordination is difficult without communication but obtains regularly with (mandatory) costless pre-play messages. In a laboratory experiment, we modify communication by making the sending of messages optional and costly. Even small costs dramatically reduce message use, but efficient coordination of actions occurs with similar frequency to that observed under costless communication. Our results can be accounted for by Govindan and Wilson's formalization of forward induction (GW-FI), which selects, among the pure-strategy equilibrium outcomes, the one in which efficiency is achieved without communication. Consistent with the introspective character of GW-FI, the fraction of players who achieve efficient coordination by forgoing the use of reasonably costly optional messages is substantial from the first period, is remarkably stable at that level, and is not significantly affected by learning.

Studying the ethical implications of e-trust in the lab

The paper presents results of recent laboratory experiments that study if and how computer-mediated communication affects cooperation and trust. It is argued that communication medium does not matter much for trust-building and maintenance, whereas relevant pre-play communication and group size can have a major influence. The implications of the findings for the design of sites that depend on trusting communities are discussed.

When Is Shuttle Diplomacy Worth the Commute? Information Sharing through Mediation

The authors study the conflict mediation problem, sometimes called “shuttle diplomacy,” when the mediator acts as a go-between and must gather information from the disputants. In the context of a general model of information mediation, they show that the incentive that disputants have to lie to the mediator undoes any advantage that might be gained by adding communication with a third party. In fact, the main result shows that any equilibrium outcome that is achievable through mediation is also achievable as an equilibrium outcome of a game with unmediated preplay communication. This is true even when the mediator is allowed to have arbitrary preferences or biases. The authors then test their empirical prediction on dispute management efforts between 1937 and 1985. The analysis supports the hypothesis that information mediation has no effect in environments where the mediator has no independent source of information.

Aligning Capacity Decisions in Supply Chains When Demand Forecasts Are Private Information: Theory and Experiment

We study the problem of a two-firm supply chain in which firms simultaneously choose a capacity before demand is realized. We focus on the role that private information about demand has on firms' ability to align their capacity decisions. When forecasts are private information, there are at most two equilibria: a complete coordination failure or a monotone equilibrium. The former equilibrium always exists, whereas the latter exists only when the marginal cost of capacity is sufficiently low. We also show that both truthful information sharing and preplay communication have an equilibrium with higher profits. We then test the model's predictions experimentally. Contrary to our theoretical predictions, we show that private demand forecasts do not have a consistently negative effect on firm profits, though capacities are more misaligned. We show that preplay communication may be more effective at increasing profits than truthful information sharing. Finally, we document that “honesty is the best policy” when communicating private information.

When Does Communication Improve Coordination?

We study costless pre-play communication of intentions among inexperienced players. Using the level-k model of strategic thinking to describe players' beliefs, we fully characterize the effects of preplay communication in symmetric 2×2 games. One-way communication weakly increases coordination on Nash equilibrium outcomes, although average payoffs sometimes decrease. Two-way communication further improves payoffs in some games but is detrimental in others. Moving beyond the class of symmetric 2 × 2 games, we find that communication facilitates coordination in common interest games with positive spillovers and strategic complementarities, but there are also games in which any type of communication hampers coordination. (JEL C72, D83)

Communication and Efficiency in Competitive Coordination Games

Costless pre-play communication has been found to effectively facilitate coordination and enhance efficiency in games with Pareto-ranked equilibria. We report an experiment in which two groups compete in a weakest-link contest by expending costly efforts. Allowing intra-group communication leads to more aggressive competition and greater coordination than control treatments without any communication. On the other hand, allowing inter-group communication leads to less destructive competition. As a result, intra-group communication decreases while inter-group communication increases payoffs. Our experiment thus provides an example of an environment where communication can either enhance or damage efficiency. This contrasts sharply with experimental findings from public goods and other coordination games, where communication always enhances efficiency and often leads to socially optimal outcomes.

Secure implementation in allotment economies

An allocation rule is securely implementable if it is strategy-proof and has no “bad” Nash equilibrium in its associated direct revelation game [Saijo, T., Sjöström, T., Yamato, T., 2007. Secure implementation. Theoretical Econ. 2, 203–229. Original work published in RIETI Discussion Paper (03-E-019), 2003]. We study this implementability notion in allotment economies with single-peaked preferences [Sprumont, Y., 1991. The division problem with single-peaked preferences: A characterization of the uniform allocation rule. Econometrica 59, 509–519]. The equal division rule and priority rules are characterized on the basis of secure implementability, which underlines a strong trade-off between efficiency and symmetry. Though the uniform rule is not securely implementable, we show that, in its direct revelation game, any “bad” Nash equilibrium is blocked by a credible coalitional deviation, and any “good” Nash equilibrium is never blocked. Thus the impossibility of securely implementing the uniform rule can be resolved by allowing pre-play communication among players.

Conformity, reciprocity and the sense of justice. How social contract-based preferences and beliefs explain norm compliance: the experimental evidence

Compliance with a social norm is a matter of self-enforceability and endogenous motivation to conform which is relevant not just to social norms but also to a wide array of institutions. Here we consider endogenous mechanisms that become effective once the game description has been enriched with pre-play communication allowing impartial agreements on a norm (even if they remain not binding in any sense). Behavioral models understand conformity as the maximization of some “enlarged” utility function properly defined to make room for the individual’s “desire” to comply with a norm reciprocally adhered to by other participants—whose conformity in turn depends on the expectation that the norm will be in fact reciprocally adhered to. In particular this paper presents an experimental study on the “conformity-with-the-ideal preference theory” (Grimalda and Sacconi in Const Polit Econ 16(3):249–276, 2005), based on a simple experimental three person game called the “exclusion game”. If the players participate in a “constitutional stage” (under a veil of ignorance) in which they decide the rule of division unanimously, the experimental data show a dramatic change in the participants’ behavior pattern. Most of them conform to the fair rule of division to which they have agreed in a pre-play communication stage, whereas in the absence of this agreement they behave more egoistically. The paper also argues that this behavior is largely consistent with what Rawls (A theory of justice, Oxford University Press, Oxford, 1971) called the “sense of justice”, a theory of norm compliance unfortunately overlooked by economists and which should be reconsidered after the behaviorist turn in economics.

Trust, communication and contracts: An experiment

In the one-shot trust or investment game without opportunities for reputation formation or contracting, economic theory predicts no trusting because there is no incentive for trustworthiness. Under these conditions, theory predicts (a) no effect of pre-play communication, and (b) universal preference for moderate cost binding contracts over interacting without contracts. We introduce the opportunities to engage in pre-play communication and to enter binding or non-binding contracts, and find (a) communication increases trusting and trustworthiness, (b) contracts are largely unnecessary for trusting and trustworthy behaviors and are eschewed by many players, (c) more trusting leads to higher earnings, and (d) both trustors and trustees favor “fair and efficient” proposals over the more unequal proposals predicted by theory.

Pre-play Communication and Credibility: A Test of Aumann's Conjecture

The effectiveness of pre-play communication in achieving efficient outcomes has long been a subject of controversy. In some environments, cheap talk may help to achieve coordination. However, Aumann conjectures that, in a variant of the Stag Hunt game, a signal for efficient play is not self-enforcing and concludes that an agreement to play [the efficient outcome] conveys no information about what the players will do. Harsanyi and Selten (1988) cite this example as an illustration of risk-dominance vs. payoff-dominance. Farrell and Rabin (1996) agree with the logic, but suspect that cheap talk will nonetheless achieve efficiency. The conjecture is tested with one-way communication. When the sender first chooses a signal and then an action, there is impressive coordination: a 94% probability for the potentially efficient (but risky) play, given a signal for efficient play. Without communication, efforts to achieve efficiency were unsuccessful, as the proportion of B moves is only 35%. I also test a hypothesis that the order of the action and the signal affects the results, finding that the decision order is indeed important. Aumann's conjecture is rejected when the signal is determined prior to the action. However, the signal's credibility diminishes when the sender is known to have first chosen an action, supporting the conjecture, as the results are not statistically distinguishable from those in the no signal case. Some applications and issues in communication and coordination are discussed.

Communication, Coordination and Networks

We study experimentally how the network structure and length of pre-play communication affect behavior and outcome in a multi-player coordination game with conflicting preferences. Network structure matters but the interaction between network and time effects is more subtle. Under each time treatment, substantial variations are observed in both the rate of coordination and distribution of coordinated outcomes across networks. But, increasing the communication length improves both efficiency and equity of coordination. In all treatments, coordination is mostly explained by convergence in communication. We also identify behaviors that explain variations in the distribution of coordinated outcomes both within and across networks.

Maximization of Absolute vs. Relative Gains in Intergroup Conflicts

What motivates individual self-sacrificial behavior in intergroup conflicts? Is it the altruistic desire to help the ingroup or the aggressive drive to hurt the outgroup? This paper introduces a new game paradigm, the Intergroup Prisoner's Dilemma - Maximizing Difference (IPD-MD) game, designed specifically to distinguish between these two motives. The game involves two groups. Each group member is given a monetary endowment and can decide how much of it to contribute. Contribution can be made to either of two pools, one which benefits the ingroup at a personal cost, and another which, in addition, harms the outgroup. An experiment demonstrated that contributions in the IPD-MD game are made almost exclusively to the cooperative within-group pool. Moreover, pre-play intragroup communication increases intragroup cooperation but not intergroup competition. These results are compared with those observed in the Intergroup Prisoner's Dilemma (IPD) game, where group members' contributions are restricted to the competitive between-group pool.

A decision support system for improving doctors’ prescribing behavior

The study adopts a well-defined game theory with a decision support system (DSS) to embed the critical factors involved in coordination game equilibrium. A data-warehouse-based DSS is used as a coordinating instrument along with the disclosure of quality report cards. Feedback on prescribing, giving information on aggregated data, along with the DSS, could be sufficient to improve prescribing behavior. The aim of this study was to apply a DSS with pre-play communication of the coordination game theory to the improvement of doctors’ antibiotic prescribing behavior. We examined whether the DSS improved the prescribing behavior, and assessed how well the participating doctors improved quality of care. We found the group using the system had a greater decrease in antibiotic prescription than the non-DSS group. This study concluded that the DSS with game-theory modeling has made significant contributions for improving the doctors’ prescribing behavior. Future research directions and managerial implications are addressed as well.

Can Observers Predict Trustworthiness?

We analyze experimental evidence on whether untrained subjects can predict how trustworthy an individual is. Two players on a TV show play a high stakes prisoner's dilemma with pre-play communication. Our subjects report probabilistic beliefs that each player cooperates, before and after communication. Subjects correctly predict that women, and players who voluntarily promise that they will cooperate, are more likely to cooperate. They are also able to distinguish truth from lies when a player is asked about his or her intentions by the host. In consequence, and in contrast with the psychology literature, our naive subjects are able to distinguish defectors from cooperators, with the latter inducing beliefs that are 7 percentage points higher. We also study Bayesian updating in the natural and complex context, and find mean reversion in beliefs, and reject the martingale property.

Language, Meaning, and Games: A Model of Communication, Coordination, and Evolution

Language is a powerful coordination device. We generalize the cheap-talk approach to pre-play communication by way of introducing a meaning correspondence between messages and actions, and by postulating two axioms met by natural languages. Players have a lexicographic preference, second to material payoffs, against deviating from the meaning correspondence. Under two-sided communication in generic and symmetric n × n-coordination games, a Nash equilibrium component in such a lexicographic communication game is evolutionarily stable if and only if it results in the unique Pareto efficient outcome of the underlying game. We extend the analysis to one-sided communication in arbitrary finite two-player games. (JEL C72, C73, Z13)