MONEY TALKS? AN EXPERIMENTAL INVESTIGATION OF CHEAP TALK AND BURNED MONEY

B-Tier
Journal: International Economic Review
Year: 2015
Volume: 56
Issue: 4
Pages: 1385-1426

Authors (3)

Thomas de Haan (not in RePEc) Theo Offerman (not in RePEc) Randolph Sloof (Tinbergen Instituut)

Score contribution per author:

0.670 = (α=2.01 / 3 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We experimentally study the strategic transmission of information in a setting where both cheap talk and money can be used. Theoretically, many equilibria exist side by side, in which senders use either costless messages, money, or both. We find that senders prefer to communicate through costless messages. Only when the interest disalignment between sender and receiver increases does cheap talk tend to break down and high sender types start burning money to enhance the credibility of their costless messages. A behavioral model assuming that sellers bear a cost of lying fits the data best.

Technical Details

RePEc Handle
repec:wly:iecrev:v:56:y:2015:i:4:p:1385-1426
Journal Field
General
Author Count
3
Added to Database
2026-01-29