IngentaConnect Evolution of Communication with Partial Common Interest

Authors: Blume A.¹; DeJong D.V.²; Kim Y-G.³; Sprinkle G.B.⁴

Source: Games and Economic Behavior, Volume 37, Number 1, October 2001 , pp. 79-120(42)

Abstract:

We experimentally investigate communication in sender-receiver games with imperfect incentive alignment. We consider both a priori meaningless messages and messages with pre-established meanings. Under four canonical incentive conditions, we get communication outcomes. However, it is by no means a fait accompli. We observe significant deterioration and recoding of a priori meanings, sucker behavior by receivers, and focal point and initial condition effects. A conservative partial common interest (PCI) condition generally is a reliable, albeit coarse predictor of the form of communication. Equilibrium selection criteria sometimes improve on the PCI prediction but neither influentiality, ex ante efficiency, nor Farrell's neologism-proofness refinement is reliable across all games, and equilibria are not always obtained. Considering comparative statics, equilibrium selection criteria are helpful but imperfect predictors of how equilibrium frequencies respond to incentives, whereas the less ambitious PCI prediction is never rejected by the data. Journal of Economic Literature Classification Numbers: C72, C92, D82. Copyright 2001 Academic Press.

Keywords: game theory; communication; information transmission; cheap talk; evolution; refinements; meaning; learning; incentive alignment

Language: English

Document Type: Research article

Affiliations: 1: Department of Economics, University of Pittsburgh, Pittsburgh, Pennsylvania, 15260 2: Department of Accounting, University of Iowa, Iowa City, Iowa, 52242 3: Department of Economics, Sung Kyun Kwan University, Seoul, 110-745, Korea 4: Department of Accounting, Indiana University, Bloomington, Indiana, 47405

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