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Pre-play communication with forgone costly messages: experimental evidence on forward induction

Published online by Cambridge University Press:  14 March 2025

Andreas Blume ,
Peter H. Kriss  and
Roberto A. Weber
Andreas Blume
Affiliation:
Department of Economics, University of Arizona, Tucson, AZ, USA
Peter H. Kriss
Affiliation:
Medallia, Inc., Palo Alto, CA, USA
Roberto A. Weber*
Affiliation:
Department of Economics, University of Zurich, Blümlisalpstrasse 10, 8006 Zurich, Switzerland
*
[email protected]
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Abstract

We experimentally study optional costly communication in Stag-Hunt games. Prior research demonstrates that efficient coordination is difficult without a communication option but obtains regularly with mandatory costless pre-play messages. We find that even small communication costs dramatically reduce message use when communication is optional, but efficient coordination can occur with similar frequency as under costless communication. These findings can be accounted for by formalizations of forward induction that take Nash equilibrium as a reference point (such as Kohlberg and Mertens in Econometrica 54: 1003–1037, 1986; Govindan and Wilson in Econometrica 77: 1–28, 2009), while formalizations that only appeal to (higher-order) knowledge of rationality remain silent in this environment.

Keywords

CoordinationCommunicationForward inductionExperimentStag huntC72C92D83
Type
Original Paper
Information
Experimental Economics , Volume 20 , Issue 2 , June 2017 , pp. 368 - 395
Copyright
Copyright © 2016 Economic Science Association

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Footnotes

Electronic supplementary material The online version of this article (doi:https://doi.org/10.1007/s10683-016-9487-y) contains supplementary material, which is available to authorized users.

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