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Elsevier, Journal of Economic Behavior and Organization, 1(81), p. 207-219, 2012

DOI: 10.1016/j.jebo.2011.10.002

SSRN Electronic Journal

DOI: 10.2139/ssrn.1933470

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

Journal article published in 2011 by Ola Andersson, Erik Wengström
This paper is available in a repository.
This paper is available in a repository.

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Abstract

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.