Working Paper: CEPR ID: DP12709
Authors: Alessandra Casella; Navin Kartik; Luis Sanchez; Sébastien Turban
Abstract: How much do people lie, and how much do people trust communication when lying is possible? An important step towards answering these questions is understanding how communication is interpreted. This paper establishes in a canonical experiment that competition can alter the shared communication code: the commonly understood meaning of messages. We study a Sender-Receiver game in which the Sender dictates how to share $10 with the Receiver, if the Receiver participates. The Receiver has an outside option and decides whether to participate after receiving a non-binding offer from the Sender. Competition for play between Senders leads to higher offers but has no effect on actual transfers, expected transfers, or Receivers' willingness to play. The higher offers signal that sharing will be equitable without the expectation that they should be followed literally: under competition "6 is the new 5".
Keywords: bargaining; cheap talk; lying; dictator game; trust game; guilt aversion
JEL Codes: C9; D9; D64; D83
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| competition (L13) | higher offers (D44) |
| competition (L13) | interpretation of offers (D44) |
| higher offers (D44) | actual transfers (F16) |
| interpretation of offers (6) (D44) | interpretation of offers (5) (D44) |