Duffy, Sean and Hartwig, Tyson and Smith, John (2011): Costly and discrete communication: An experimental investigation.
This is the latest version of this item.
Download (184kB) | Preview
Language is an imperfect and coarse means of communicating information about a complex and nuanced world. We report on an experiment designed to capture this feature of communication. The messages available to the sender imperfectly describe the state of the world, however the sender can improve communication, at a cost, by increasing the complexity or elaborateness of the message. Here the sender learns the state of the world then sends a message to the receiver. The receiver observes the message and provides a best guess about the state. The incentives of the players are aligned in the sense that both sender and receiver are paid an amount which is increasing in the accuracy of the receiver's guess. We find that the size of the language endogenously emerges as a function of the costs of communication. Specifically, we find that higher communication costs are associated a smaller language. Although the equilibrium predictions do not perform well, this divergence occurs in a manner which is consistent with the experimental communication literature: overcommunication. We find that the sender's payoffs relative to equilibrium payoffs are decreasing in the cost of communication. We also find that the receiver's payoffs relative to equilibrium payoffs are increasing in the cost of communication. Finally, we find imperfections in coordination on the basis of the experimental labels.
|Item Type:||MPRA Paper|
|Original Title:||Costly and discrete communication: An experimental investigation|
|Keywords:||information transmission; cheap talk; overcommunication; bounded rationality; experimental game theory|
|Subjects:||D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information ; Mechanism Design
C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C91 - Laboratory, Individual Behavior
C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games
|Depositing User:||John Smith|
|Date Deposited:||24. Jul 2012 23:29|
|Last Modified:||05. Jan 2016 10:47|
Blume, Andreas, DeJong, Douglas, Kim, Yong-Gwan and Sprinkle, Geoffrey (1998): "Experimental evidence on the evolution of meaning of messages in sender-receiver games," American Economic Review, 88, 1323--1340.
Blume, Andreas, DeJong, Douglas, Kim, Yong-Gwan and Sprinkle, Geoffrey (2001): "Evolution of communication with partial common interest," Games and Economic Behavior, 37, 79--120.
Blume, Andreas and Gneezy, Uri (2000): "An Experimental Investigation of Optimal Learning in Coordination Games," Journal of Economic Theory, 90, 161--172.
Cai, Hongbin and Wang, Joseph Tao-Yi (2006): "Overcommunication in strategic information transmission games," Games and Economic Behavior, 56, 7--36.
Crawford, Vincent and Haller, Hans (1990): "Learning How to Cooperate: Optimal Play in Repeated Coordination Games," Econometrica, 58, 581--596.
Crawford, Vincent and Sobel, Joel (1982): "Strategic Information Transmission," Econometrica, 50(6), 1431--1451.
Dickhaut, John, McCabe, Kevin and Mukherji, Arijit (1995): "An experimental study of strategic information transmission," Economic Theory, 6, 389--403.
Fischbacher, Urs (2007): "z-Tree: Zurich Toolbox for Ready-made Economic Experiments," Experimental Economics, 10(2), 171--178.
Gneezy, Uri (2005): "Deception: The Role of Consequences," American Economic Review, 95(1), 384--394.
Hertel, Johanna and Smith, John (2012): "Not So Cheap Talk: Costly and Discrete Communication," working paper Rutgers University-Camden.
Hurkens, Sjaak and Kartik, Navin (2009): "Would I Lie to You? On Social Preferences and Lying Aversion," Experimental Economics, 12, 180--192.
Kawagoe Toshiji and Takizawa, Hirokazu (2009): "Equilibrium refinement vs. level-k analysis: An experimental study of cheap-talk games with private information," Games and Economic Behavior, 66, 238--255.
Kreps, David (1990): "A Course in Microeconomic Theory," Princeton University Press, Princeton NJ, pages 414--415.
McKelvey, Richard D. and Palfrey, Thomas R. (1998): "Quantal Response Equilibria for Extensive Form Games," Experimental Economics, 1, 9--41.
Sanchez-Pages, Santiago and Vorsatz, Marc (2007): "An Experimental Study of Truth-Telling in a Sender-Receiver Game," Games and Economic Behavior, 61, 86--112.
Sanchez-Pages, Santiago and Vorsatz, Marc (2009): "Enjoy the Silence: An Experiment on Truth-Telling," Experimental Economics, 12, 220--241.
Sobel, Joel (2012): "Complexity versus Conflict in Communication," working paper UCSD.
Weber, Roberto A. and Camerer, Colin F. (2003): "Cultural Conflict and Merger Failure: An Experimental Approach," Management Science, 49(4), 400--415.
Available Versions of this Item
Costly and discrete communication: An experimental investigation. (deposited 14. May 2011 01:35)
- Costly and discrete communication: An experimental investigation. (deposited 24. Jul 2012 23:29) [Currently Displayed]