Working paper
Issue number: 
42/2014
Series: 
CORE Discussion Paper
Year: 
2014
PDF [1]
The paper analyzes the role of the structure of communication - i.e. who is talking with whom - on the 
choice of messages, on their credibility and on actual play. We run an experiment in a three-player 
coordination game with Pareto ranked equilibria, where a pair of agents has a profitable joint deviation 
from the Pareto-dominant equilibrium. According to our analysis of credibility, the subjects should 
communicate and play the Pareto optimal equilibrium only when communication is public. When pair 
of agents exchange messages privately, the players should play the Pareto dominated equilibrium and 
disregard communication. The experimental data conform to our predictions: the agents reach the 
Pareto-dominant equilibrium only when announcing to play it is credible. When private communication 
is allowed, lying is prevalent, and players converge to the Pareto-dominated equilibrium. Nevertheless, 
at the individual level, players’ beliefs and choices tend to react to messages even when these are non-credible.
