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Cheap talk and cooperation in Stackelberg games

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journal contribution
posted on 08.11.2016, 11:44 by Raimo P. Hamalainen, Ilkka Leppanen
Previous literature on cheap talk suggests that it is used to increase cooperation. We study cheap talk and the effect of the leader’s private payoff information in new repeated Stackelberg game settings. Our results confirm earlier studies that the players cooperate in repeated Stackelberg games with complete payoff information. In the cheap talk setting the follower has the actual first mover advantage and should in theory benefit from it, but we find that many followers cooperate instead. Similarly, many leaders do not use cheap talk for cheating but commit to symmetric joint-optimum quantities. The leader’s private payoff information results in a low frequency of cooperation but in the presence of cheap talk players do cooperate.

History

School

  • Business and Economics

Department

  • Business

Published in

Central European Journal of Operations Research

Citation

HAMALAINEN, R.P. and LEPPANEN, I., 2017. Cheap talk and cooperation in Stackelberg games. Central European Journal of Operations Research, 25 (2), pp. 261–285.

Publisher

© Springer

Version

AM (Accepted Manuscript)

Publisher statement

This work is made available according to the conditions of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) licence. Full details of this licence are available at: https://creativecommons.org/licenses/by-nc-nd/4.0/

Acceptance date

10/06/2016

Publication date

2017

Notes

The final publication is available at Springer via http://dx.doi.org/10.1007/s10100-016-0444-9

ISSN

1435-246X

eISSN

1613-9178

Language

en