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Information Transmission under the Shadow of the Future: An Experiment

Author

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  • Alistair J. Wilson
  • Emanuel Vespa

Abstract

We experimentally examine how information transmission functions in an ongoing relationship. Where the one-shot cheap-talk literature documents substantial overcommunication and preferences for honesty, the outcomes in our repeated setting are more consistent with uninformative babbling outcomes. This is particularly surprising, as honest revelation is supportable as an equilibrium outcome in our repeated setting. We show that inefficient outcomes are driven by a coordination failure on how to distribute the gains from information sharing. However, when agents can coordinate on the payment of an "information rent," honest revelation emerges.

Suggested Citation

  • Alistair J. Wilson & Emanuel Vespa, 2020. "Information Transmission under the Shadow of the Future: An Experiment," American Economic Journal: Microeconomics, American Economic Association, vol. 12(4), pages 75-98, November.
    • Handle: RePEc:aea:aejmic:v:12:y:2020:i:4:p:75-98
    DOI: 10.1257/mic.20170403
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    Citations

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    Cited by:

    1. Chloe Tergiman & Marie Claire Villeval, 2019. "The Way People Lie in Markets," Working Papers halshs-02292040, HAL.
    2. Guillaume R. Fréchette & Alessandro Lizzeri & Jacopo Perego, 2022. "Rules and Commitment in Communication: An Experimental Analysis," Econometrica, Econometric Society, vol. 90(5), pages 2283-2318, September.
    3. Johannes Hoelzemann & Nicolas Klein, 2021. "Bandits in the lab," Quantitative Economics, Econometric Society, vol. 12(3), pages 1021-1051, July.
    4. Emanuel Vespa & Taylor Weidman & Alistair J. Wilson, 2021. "Testing Models of Strategic Uncertainty: Equilibrium Selection in Repeated Games," Papers 2101.05900, arXiv.org.
    5. Kartal, Melis & Müller, Wieland & Tremewan, James, 2021. "Building trust: The costs and benefits of gradualism," Games and Economic Behavior, Elsevier, vol. 130(C), pages 258-275.
    6. Chloe Tergiman & Marie Claire Villeval, 2023. "The Way People Lie in Markets: Detectable vs. Deniable Lies," Management Science, INFORMS, vol. 69(6), pages 3340-3357, June.
    7. David Ettinger & Philippe Jehiel, 2021. "An experiment on deception, reputation and trust," Experimental Economics, Springer;Economic Science Association, vol. 24(3), pages 821-853, September.

    More about this item

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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