Citation

Discussion Paper Details

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Title: Can there be a market for cheap-talk information? Some experimental evidence

Author(s): Antonio Cabrales, Francesco Feri, Piero Gottardi and Miguel A. Meléndez-Jiménez

Publication Date: March 2016

Keyword(s): Auction, cheap talk, Experiment, Information Acquisition and Information Sale

Programme Area(s): Industrial Organization, Labour Economics and Public Economics

Abstract: This paper reports on experiments testing the viability of markets for cheap talk information. We find that these markets are fragile. The reasons are surprising given the previous experimental results on cheap-talk games. Our subjects provide low-quality information even when doing so does not increase their monetary payoff. We show that this is not because subjects play a different (babbling) equilibrium. By analyzing subjects' behavior in another game, we find that those adopting deceptive strategies tend to have envious or non-pro-social traits. The poor quality of the information transmitted leads to a collapse of information markets.

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Bibliographic Reference

Cabrales, A, Feri, F, Gottardi, P and Meléndez-Jiménez, M. 2016. 'Can there be a market for cheap-talk information? Some experimental evidence'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=11206