Communication in Strategic Environments

Communication is an integral part of human interactions, including but not limited to bargaining situations, political competition, social interactions, and learning environments. What role does communication play in various strategic settings? How does this depend on the conflict of interests between interacting parties? Can communication without commitment (“cheap talk”) transmit valuable information?

Our research shows that the answers to these questions depend on the precise structure of interactions between involved parties. For instance, in the bargaining environment in which individuals with conflicting preferences must reach an agreement on the division of fixed resources, these answers depend on the voting protocol used by participants (i.e., the “committee”) to reach agreements. In the committees that use majority-voting rule, communication amplifies competition for limited resources and results in more unequal (less egalitarian) allocations. The opposite happens in the committees that use a unanimity-voting rule, in which introduction of communication leads to more egalitarian allocations.

In contrast, in the auction settings, communication has a very different effect of facilitating collusion between auction participants, despite the fact that these auctions involve one-shot rather than repeated interaction. Understanding which features of the environment trigger different types of communication and how communication content affects subsequent behavior of strategic agents are important questions in this research agenda.

The following are a sampling of publications in this field by scholars affiliated with CTESS:

  • “Collusion through Communication in Auctions” (2018), Marina Agranov and Leeat Yariv, Games and Economic Behavior
  • “Communication Among Voters Benefits the Majority Party” (2018), Thomas Palfrey and Kirill Pogorelskiy, Economic Journal
  • “A Pari-Mutuel-Like Mechanism for Information Aggregation: A Field Test Inside Intel” (2018), Ben Gillen, Charlie Plott, and Matt Shum, Journal of Political Economy
  • “How Cheap Talk Enhances Efficiency in Threshold Public Goods Games” (2017), Thomas Palfrey, Howard Rosenthal, and Nilanjan Roy, Games and Economic Behavior

Return to the CTESS research overview page here.