Strategic communication: An experimental investigation

In this paper we attempt to compare theoretically and experimentally three models of strategic information transmission. In particular we focus on the models by Crawford & Sobel (1982), Lai (2010) and Ehses-Friedrich (2011). These three models differ in the information that the receiver possesses and the sender´s knowledge about these information. Lai, 2010 introduce a partially informed decision maker into Crawford & Sobel´s model. Ehses-Friedrich (2011) makes the decision maker´s knowledge public knowledge. The experiment replicates the results of earlier experimental studies (Dickhaut et al., 1995, Cai & Wang, 2006, Wang et al., 2010): on the one hand experts usually give a too truthful advice, they overcommunicate. On the other hand the decision makers rely too much on the received information. Moreover, communication as well as payoffs decrease with increasing preference differences. We find that when decision makers are privately informed the messages from the expert to the decision maker are less precise than in the baseline setting. In the public information treatment, the communication is less biased. In all treatments, however, the messages are more precise than theoretically predicted

Increasing consumer surplus through a novel product testing mechanism

Our study proposes a novel mechanism to reduce information asymmetry about product quality between buyers and sellers. Product testing organizations like Consumer Reports (US) and Stiftung Warentest (Germany) seek to reduce this asymmetry by providing credible information. However, limited capacity leads to testing of only a select number of product models, often bestsellers, which can yield suboptimal information. After outlining our mechanism, we develop a game to derive testable predictions. We show theoretically that a unique Nash equilibrium exists in which our mechanism yields optimal information, equivalent to a world of complete information, while selecting bestsellers does not. Subsequently, we confirm experimentally that our mechanism increases consumer surplus.In dieser Studie schlagen wir einen neuartigen Mechanismus zur Verringerung der Informationsasymmetrie bezüglich der Produktqualität zwischen Käufern und Verkäufern vor. Produkttestorganisationen wie Consumer Reports (USA) und Stiftung Warentest (Deutschland) versuchen, diese Asymmetrie durch die Bereitstellung glaubwürdiger Informationen zu verringern. Begrenzte Kapazitäten führen jedoch dazu, dass nur eine ausgewählte Anzahl von Produktmodellen, oft Bestseller, getestet werden, was zu suboptimalen Informationen führen kann. Nachdem wir unseren Mechanismus skizzieren, entwickeln wir ein Spiel um überprüfbare Vorhersagen herzuleiten. Wir zeigen theoretisch, dass es ein eindeutiges Nash-Gleichgewicht gibt, in dem unser Mechanismus optimale Informationen bereitstellt, was einer Welt vollständiger Informationen entspricht, während die Auswahl von Bestsellern dies nicht tut. Anschließend bestätigen wir experimentell, dass unser Mechanismus die Konsumentenrente erhöht