Asymmetric and Endogenous Communication in Competition Between Groups

Springer Verlag (Germany)
Publication Type:
Journal Article
Experimental Economics, 2017, 20 (4), pp. 946 - 972
Issue Date:
Full metadata record
Within-group communication in competitive coordination games has been shown to increase competition between groups and lower efficiency. This study further explores potentially harmful effects of communication, by addressing the questions of (1) asymmetric communication and (2) the endogenous emergence of communication. Our theoretical analysis provides testable hypotheses regarding the effect of communication on competitive behavior and efficiency. We test these predictions using a laboratory experiment. The experiment shows that although asymmetric communication is not as harmful as symmetric communication, it leads to more aggressive competition and lower efficiency relative to the case when neither group can communicate. Moreover, groups vote to endogenously establish communication channels even though they would earn higher payoffs if jointly they chose to restrict within-group communication.
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