Communication, Renegotiation, and the Scope for Collusion

We study the effect of communication in an experimental game where cooperation is consistent with equilibrium play if players share an understanding that cheating will be punished. Consistent with communication acting as a coordinating device, credible preplay threats to punish cheating are the most...

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Bibliographic Details
Published inAmerican economic journal. Microeconomics Vol. 6; no. 2; pp. 247 - 278
Main Authors Cooper, David J., Kühn, Kai-Uwe
Format Journal Article
LanguageEnglish
Published Pittsburgh American Economic Association 01.05.2014
Subjects
Agreements
Cheating
Collusion
Communication
Communication theory
Cooperation
Credible threats
Discourse analysis
Economic theory
Economics
Equilibrium
Experiments
Game theory
Games
Microeconomics
Nash equilibrium
Payoffs
Repeated games
Social communication
Studies
Threats
United States > US
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Summary:We study the effect of communication in an experimental game where cooperation is consistent with equilibrium play if players share an understanding that cheating will be punished. Consistent with communication acting as a coordinating device, credible preplay threats to punish cheating are the most effective message to facilitate collusion. Promises to collude also improve cooperation. Credible threats do not occur in a treatment with a limited message space that permits threats of punishment. Contrary to some theoretical predictions, renegotiation possibilities facilitate collusion.
ISSN:1945-7669
1945-7685
DOI:10.1257/mic.6.2.247