Only the illusion of possible collusion? Cheap talk and similar goals: Some experimental evidence
Journal Article (Journal Article)
Firms routinely engage in public communications that are available to various constituencies, including competitors. In a laboratory experiment with prisoner's dilemma payoffs, the authors investigate the effect of one form of these communications - cheap talk signals: statements that are costless, nonbinding, and nonveriflable and do not directly affect the payoffs for either party. The authors find that only competitors that perceive that they share goals for a joint, coordinated outcome correctly update their beliefs about their competitor's next move on the basis of cheap talk signals. The authors contend that the conditions for cheap talk to work may be so rare that cheap talk is more likely to fall on deaf ears than to result in collusion. The authors suggest implications for managers and public policymakers as well as areas for further research.
Full Text
Duke Authors
Cited Authors
- Moore, MC; Morgan, RM; Moore, MJ
Published Date
- January 1, 2001
Published In
Volume / Issue
- 20 / 1
Start / End Page
- 27 - 37
Electronic International Standard Serial Number (EISSN)
- 1547-7207
International Standard Serial Number (ISSN)
- 0743-9156
Digital Object Identifier (DOI)
- 10.1509/jppm.20.1.27.17282
Citation Source
- Scopus