The effect of continuous-time cheap talk in the experimental minimum effort game

ABSTRACT

We experimentally investigated whether continuous-time cheap talk improves the effort level in a minimal effort game with multiple Pareto-ranked Nash equilibria. In each round of the game, a player freely changes the message before he or she makes decisions, and constantly monitors other members’ messages. We have two results. First, continuous-time cheap talk realizes a higher effort level than does one-shot cheap talk. Second, the group in which every member chooses the maximum effort in the first two rounds eventually achieves an efficient outcome.

KEYWORDS:

• Coordination game
• minimum effort game
• cheap talk
• continuous time
• experiment

JEL CLASSIFICATION:

• C72
• C92

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ Cheap talk is No cost, No binding, and Pre-action (Farrell 1987).

² While Van Huyck, Battalio, and Beil (1990) and Blume and Ortmann (2007) placed a Pareto efficient equilibrium in the upper left corner of the payoff table, we placed it in the lower right corner. This was done because the upper left corner is more likely to be the area of focus, and therefore, the Pareto efficient equilibrium may increase as an unintended consequence.

³ See Appendix for the experimental instructions for all treatments.

⁴ Although our convergence condition is stricter than that of Blume and Ortmann (2007), their convergence gives exactly the same result as shown in Table 4.

⁵ Our instructions are created with as small change as possible from instruction of Blume and Ortmann (2007) because we make it possible to compared with result of them.

Additional information

Funding

This study was financially supported by Japan Society for the Promotion of Science ([26380242], [16H03596]) and the Joint Usage/Research Center at ISER, Osaka University.