Cheap talk and cooperation in Stackelberg games
journal contributionposted on 2016-11-08, 11:44 authored 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.
- Business and Economics
Published inCentral European Journal of Operations Research
CitationHAMALAINEN, R.P. and LEPPANEN, I., 2017. Cheap talk and cooperation in Stackelberg games. Central European Journal of Operations Research, 25 (2), pp. 261–285.
- AM (Accepted Manuscript)
Publisher statementThis 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/
NotesThe final publication is available at Springer via http://dx.doi.org/10.1007/s10100-016-0444-9