The dynamics of costly information sharing, falsifi cation and accuracy

This paper reports experimental data describing the dynamics of three key information-sharing outcomes: quantity of information shared, falsification and accuracy. The experimental design follows a formal model predicting that cooperative incentives are needed to motivate subsidiaries of large organizations to share information. Empirical reaction functions reveal how lagged values of information-sharing outcomes influence information sharing in the current round. Cooperative treatments pay bonuses to everyone if at least one individual (or subsidiary) achieves accuracy. Tournament treatments pay a single bonus to whoever achieves accuracy first. As expected, tournament incentives tend to reduce sharing, increase falsification and impair accuracy. Several surprises not predicted by the formal model emerge from the data. Conditional cooperation occurs regardless of the incentive scheme, implying that the mechanism through which incentives influence improvements in information sharing is indirect.

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