Cheap talk and evidence: an experiment: Seminar by Valeria Burdea from University of Nottingham

On Wednesday, 10th January DART hosted PhD Candidate Valeria Burdea from University of Nottingham who presented her current research.

Title: Cheap talk and evidence: an experiment.

Abstract: We investigate the effect of cheap talk on individuals’ perception of partially-informative evidence. To do so we use a sender – receiver game with asymmetric information and bi-dimensional states that can be either good or bad. In this setting, the informed party (the sender) must disclose one of the two state-dimensions with the goal of convincing the receiver that the state is good. We vary whether in addition to the disclosure action, the sender has the possibility to communicate with the receiver by sending her a message regarding the values of the two dimensions. From a normative perspective, in the presence of hard evidence cheap talk should have no bearing on receiver’s decisions. Our results show that cheap talk messages prime more mistakes in the appraisal of the evidence provided, leading to a negative impact on receiver’s payoff. In addition, we find that this effect is mitigated by increasing receiver’s control over her information space. These findings have implications for the design of information distribution processes in persuasion environments such as political campaigns or buyer-seller interactions.

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