Communication is More than Information Sharing: The Role of Knowledge in Sender-Receiver Games 

In communication games it is commonly assumed that information is exogenously given to the sender. Yet, in reality, the sender’s information is often a product of her knowledge and expertise. Consequently, a message may not only reveal information about a certain state of the world, but also about the sender’s knowledge and may thus affect her social image. This paper examines the effect of sharing knowledge on truth-telling. In particular, I study a cheap talk game with completely misaligned preferences where the information precision depends on sender's knowledge and the social status of the knowledge area is varied. In two treatments I provide senders with multiple-choice questions on (1) general knowledge and (2) tabloid topics. I find that truth-telling rates are significantly higher in the former case and the driving channel is the ability to signal knowledge.

Communication and voting in heterogeneous committees: An experimental study (with Mark Le Quement) (revision requested from: Journal of Economic Behavior and Organization)

We study experimentally the effectiveness of communication in common value committees exhibiting publicly known heterogeneous biases. We test models assuming respectively self-interested and strategic-, joint payoff-maximizing- and cognitively heterogeneous agents. These predict varying degrees of strategic communication. We use a 2 × 2 design varying the information protocol (communication vs exogenous public signals) and the group composition (heterogeneous vs homogeneous). Results are only consistent with the third model. Roughly 80% of (heuristic) subjects truth-tell and vote with the majority of announced signals. Remaining (sophisticated) agents lie strategically and approximately apply their optimal decision rule.

Institutional endogeneity and third-party sanctions in social dilemmas (with Pedro Robalo,Franziska Tausch) (submitted)

This paper studies experimentally how the endogeneity of sanctioning institutions affects the severity of punishment in social dilemmas. We allow individuals to vote on the introduction of third-party-administered sanctions, and compare situations in which the adoption of this institution is endogenously decided via majority voting to situations in which it is exogenously imposed by the experimenter. Our experimental design addresses the self-selection and signaling effects that arise when subjects can vote on the institutional setting. We find that punishment is significantly higher when the sanctioning institution is exogenous, which can be explained by a difference in the effectiveness of punishment. Subjects respond to punishment more strongly when the sanctioning institution is endogenously chosen. As a result, a given cooperation level can be reached through milder punishment when third-party sanctions are endogenous. However, overall efficiency does not differ across the two settings as the stricter punishment implemented in the exogenous one sustains high cooperation as subjects interact repeatedly.

Testing the Endowment Effect for Default Rules (with Andreas Nicklisch) (forthcoming in Review of Law and Economics)

This paper explores potential endowment effects of contractual default rules. For this purpose, we analyze the Hadley liability default clause in a model of bilateral bargaining of lotteries against safe options. The liability default clause determines the right for the safe payoff option. We test the model in series of laboratory experiments. The results reveal a substantial willingness-to-accept to willingness-to-pay gap for the right to change lotteries against safe options. Even if we apply the incentive compatible Becker-DeGroot-Marschak value elicitation mechanism, there is a significant gap indicating a robust endowment effect caused by default rules. Differences of expected values of the lotteries and the safe options consistently decrease the gaps. Implications for applications of default rules in the law are discussed.