Communication is More than Information Sharing: The Role of Status Knowledge (with Michael Kurschilgen)   (revision requested from Games and Economic Behavior)

In cheap talk games where senders’ accuracy of information depend on their background knowledge, a sender with image concerns may want to signal that she is knowledgeable. These image benefits may, in turn, depend on the type of knowledge and its perceived social status. Theoretically, we show that when some senders care sufficiently about their image, there is both a non-informative babbling equilibrium, and a separating equilibrium, in which the average sender’s message is informative and receivers always follow. In a laboratory experiment, we vary the social status of knowledge (1) by providing senders with multiple choice questions on either (a) broadsheet topics (general knowledge) or (b) tabloid topics, and (2) by systematically modifying the degree of difficulty. We find truth-telling rates to be significantly higher when senders can signal status knowledge.

Communication and voting in heterogeneous committees: An experimental study (with Mark Le Quement) (revision submitted to 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.