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An Experimental Study on the Effects of Communication, Credibility, and Clustering in Network Games

Author

Listed:
  • Charness, Gary

    (University of California, Santa Barbara)

  • Feri, Francesco

    (University of Innsbruck)

  • Meléndez-Jiménez, Miguel A.

    (University of Malaga)

  • Sutter, Matthias

    (Max Planck Institute for Research on Collective Goods)

Abstract
The effectiveness of social interaction depends strongly on an ability to coordinate actions efficiently. In large networks, such coordination may be very difficult to achieve and may depend on the communication technology and the network structure. We examine how pre-play communication and clustering within networks affect coordination in a challenging experimental game on eight-person networks. Free-form chat is enormously effective in achieving the nonequilibrium efficient outcome in our game, but restricted communication (where subjects can only indicate their intended action) is almost entirely ineffective. We can rationalize this result with a novel model about the credibility of cheap-talk messages. This credibility is much larger with freeform message communication than with restricted communication. We are the first to model this credibility and show, both theoretically and experimentally, an interaction effect of network structure and communication technologies. We also provide a model of message diffusion, which indeed predicts that diffusion will be more rapid without clustering and is consistent with our data.

Suggested Citation

  • Charness, Gary & Feri, Francesco & Meléndez-Jiménez, Miguel A. & Sutter, Matthias, 2019. "An Experimental Study on the Effects of Communication, Credibility, and Clustering in Network Games," IZA Discussion Papers 12347, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp12347
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    File URL: https://docs.iza.org/dp12347.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    experiment; cheap talk; credibility; communication; clustering; networks;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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