Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2011-11-03
Number: 11-153/1
Author-Name: Adrian de Groot Ruiz
Author-Workplace-Name: Radboud University Nijmegen
Author-Name: Theo Offerman
Author-Workplace-Name: University of Amsterdam
Author-Name: Sander Onderstal
Author-Workplace-Name: University of Amsterdam
Title: An Experimental Study of Credible Deviations and ACDC
Abstract: We test the Average Credible Deviation Criterion (ACDC), a stability measure and refinement for cheap talk equilibria introduced in De Groot Ruiz, Offerman & Onderstal (2011b). ACDC has been shown to be predictive under general conditions and to organize data well in previous experiments meant to test other concepts. This experiment provides the first systematic test of whether and to which degree credible deviations matter for the stability of cheap talk equilibria. Furthermore, it tests ACDC in a new setting. We also introduce a neologism dynamic to explain the main dynamic characteristics of our data. Our main result is that credible deviations matter and matter gradually, as predicted by ACDC. In addition, our data support the predictions of ACDC in settings where existing concepts are silent. Finally, we test the prediction derived in De Groot Ruiz, Offerman & Onderstal (2011a) about bargaining power and information transmission. We find that, as predicted, less information is transmitted as the Sender's relative power decreases.
Classification-JEL: C72, C92, D82, D83
Keywords: Cheap Talk, Refinement, Selection, Experiment, Neologism Proofness, Announcement Proofness, ACDC
File-Url: https://papers.tinbergen.nl/11153.pdf
File-Format: application/pdf
File-Size: 800530 bytes
Handle: RePEc:tin:wpaper:20110153