How does communication affect beliefs in one-shot games with complete information?

This paper experimentally studies unilateral communication of intentions in eight different two-player one-shot normal form games with complete information. We find that communication is used both to coordinate and to deceive, and that messages have a significant impact on beliefs and behavior even in dominance solvable games. Nash equilibrium and cognitive hierarchy jointly account for many regularities, but not all of the evidence. Sophisticated sender behavior is especially difficult to reconcile with existing models.

[1]  Colin Camerer,et al.  A Cognitive Hierarchy Model of Games , 2004 .

[2]  A. Tversky,et al.  Thinking through uncertainty: Nonconsequential reasoning and choice , 1992, Cognitive Psychology.

[3]  Margaret Gilbert,et al.  Rationality, coordination, and convention , 1990, Synthese.

[4]  T. Tan,et al.  The Bayesian foundations of solution concepts of games , 1988 .

[5]  B. Bernheim.  Rationalizable Strategic Behavior , 1984 .

[6]  Miguel A. Costa-Gomes,et al.  Stated Beliefs and Play in Normal-Form Games , 2007 .

[7]  Ken Binmore,et al.  A Backward Induction Experiment , 2002, J. Econ. Theory.

[8]  L. Alaoui,et al.  Endogenous Depth of Reasoning , 2016 .

[9]  Gary Charness,et al.  Self-Serving Cheap Talk: A Test Of Aumann's Conjecture , 2000, Games Econ. Behav..

[10]  R. Aumann.  Subjectivity and Correlation in Randomized Strategies , 1974 .

[11]  M. Johannesson,et al.  Promises, Threats and Fairness , 2004 .

[12]  David Pearce.  Rationalizable Strategic Behavior and the Problem of Perfection , 1984 .

[13]  Dale O. Stahl,et al.  Level-n bounded rationality in two-player two-stage games , 2008 .

[14]  Robert Östling,et al.  When Does Communication Improve Coordination , 2010 .

[15]  A. Shleifer,et al.  Coarse Thinking and Persuasion , 2006 .

[16]  D. Stahl,et al.  On Players' Models of Other Players: Theory and Experimental Evidence , 1995 .

[17]  Colin Camerer,et al.  Imperfect Choice or Imperfect Attention? Understanding Strategic Thinking in Private Information Games , 2014 .

[18]  V. Crawford.  New Directions for Modelling Strategic Behavior: Game-Theoretic Models of Communication, Coordination, and Cooperation in Economic Relationships , 2016 .

[19]  J. Nash.  NON-COOPERATIVE GAMES , 1951, Classics in Game Theory.

[20]  Philippe Jehiel,et al.  A theory of deception , 2010 .

[21]  Pedro Rey-Biel,et al.  Equilibrium play and best response to (stated) beliefs in normal form games , 2009, Games Econ. Behav..

[22]  Ben Greiner,et al.  An Online Recruitment System for Economic Experiments , 2004 .

[23]  L. Samuelson.  Economic Theory and Experimental Economics , 2005 .

[24]  Joseph Farrell.  Communication, coordination and Nash equilibrium , 1988 .

[25]  V. Crawford.  Lying for Strategic Advantage: Rational and Boundedly Rational Misrepresentation of Intentions , 2003 .

[26]  Miguel A. Costa-Gomes,et al.  Cognition and Behavior in Two-Person Guessing Games: An Experimental Study , 2003 .

[27]  Eric J. Johnson,et al.  Detecting Failures of Backward Induction: Monitoring Information Search in Sequential Bargaining , 2002, J. Econ. Theory.

[28]  R. Aumann,et al.  Rational Expectations in Games , 2008 .

[29]  R. Aumann,et al.  Epistemic Conditions for Nash Equilibrium , 1995 .

[30]  M. Deutsch.  Trust and suspicion , 1958 .

[31]  D. Stahl,et al.  Experimental evidence on players' models of other players , 1994 .

[32]  Dale O. Stahl,et al.  Subgame perfection in ultimatum bargaining trees , 2008, Games Econ. Behav..

[33]  Joseph Farrell.  Cheap Talk, Coordination, and Entry , 1987 .

[34]  Miguel A. Costa-Gomes,et al.  Cognition and Behavior in Normal-Form Games: An Experimental Study , 1998 .

[35]  J. Sonnemans,et al.  A Truth Serum for Non-Bayesians: Correcting Proper Scoring Rules for Risk Attitudes* , 2009 .

[36]  T. Schelling.  Experimental Games and Bargaining Theory , 1961 .

[37]  Jörgen W. Weibull,et al.  KS Language , meaning and games : a model of communication , coordination and evolution , 2007 .

[38]  Morton Deutsch,et al.  Strategies of inducing cooperation: an experimental study , 1967 .

[39]  U. Fischbacher.  z-Tree: Zurich toolbox for ready-made economic experiments , 1999 .

[40]  Colin Camerer,et al.  Pinocchio's Pupil: Using Eyetracking and Pupil Dilation to Understand Truth-Telling and Deception in Sender-Receiver Game , 2009 .

[41]  Daniel John Zizzo,et al.  Experimenter demand effects in economic experiments , 2008 .

[42]  R. Nagel.  Unraveling in Guessing Games: An Experimental Study , 1995 .

[43]  Martin Sefton,et al.  Risk, pre-play communication and equilibrium , 2004, Games Econ. Behav..

[44]  J. Sobel.  A Theory of Credibility , 1985 .

[45]  Matthew Rabin,et al.  A Model of Pre-game Communication , 1991 .

[46]  David F. Sally.  Conversation and Cooperation in Social Dilemmas , 1995 .

[47]  Navin Kartik,et al.  Credulity, Lies, and Costly Talk , 2007, J. Econ. Theory.

[48]  Jörgen W. Weibull,et al.  Testing Game Theory , 2004 .

[49]  Miguel A. Costa-Gomes,et al.  Structural Models of Nonequilibrium Strategic Thinking: Theory, Evidence, and Applications , 2013 .

[50]  J. Abeler,et al.  Preferences for Truth-Telling , 2016, Econometrica.

[51]  A. Shaked,et al.  Testing non-cooperative bargaining theory: a preliminary study , 1985 .