posted on 2016-11-08, 11:44authored byRaimo 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.
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
2016-06-10
Publication date
2017
Notes
The final publication is available at Springer via http://dx.doi.org/10.1007/s10100-016-0444-9