Communicating Intentions in Noisy Repeated Games

Abstract

To explore the role of communication in promoting cooperation, we let participants indicate their intended action in a repeated game experiment where actions are implemented with errors. Even though communication is cheap talk, we find that the majority of participants communicate honestly. As a result, communication has a positive effect on cooperation when the payoff matrix makes the returns to cooperation high. When the payoff matrix gives a low return to cooperation, conversely, there is a negative effect of communication on cooperation. These results suggest that cheap talk communication, which is a common feature of daily life, can promote cooperation in repeated games, but only when there is already a self-interested motivation to cooperate.