DP12353 Transparency is overrated: communicating in a coordination game with private information

Author(s): Antonio Cabrales, Michalis Drouvelis, Zeynep Gurguc, Indrajit Ray
Publication Date: October 2017
Keyword(s): Battle of the Sexes, cheap talk, coordination, private information
JEL(s): C72, C92, D83
Programme Areas: Labour Economics, Public Economics, Industrial Organization
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=12353

We consider an experiment with a version of the Battle of the Sexes game with two-sided private information, allowing a possible round of either one-way or two-way cheap talk before the game is played. We compare different treatments to study truthful revelation of information and subsequent payoffs from the game. We find that the players are overall truthful about their types in the cheap-talk phase in both one-way or two-way talk. Furthermore, the unique symmetric cheap-talk equilibrium in the two-way cheap talk game is played when they players fully reveal their information; however, they achieve higher payoffs in the game when the talk is one-way as the truthful reports facilitate desired coordination.