Economic principles in communication: an experimental study.

Area of Science:

• Behavioral Economics
• Game Theory
• Experimental Economics

Background:

• Communication games involve senders and receivers with shared interests.
• Theories predict efficient signaling equilibria, like Horn's rule, especially with costly signals.
• Understanding which economic principles drive signaling behavior is crucial.

Purpose of the Study:

• To experimentally investigate how economic principles influence communication in sender-receiver games.
• To test whether Horn's rule or other theories best explain signaling behavior under different conditions (costly vs. costless signals).
• To examine the impact of priming on signaling strategies.

Main Methods:

• Designed and implemented variants of the sender-receiver game.
• Varied signal costs (costly vs. costless) and introduced priming conditions.
• Analyzed participant behavior to identify adherence to Horn's rule and compare theoretical predictions.

Main Results:

• Participants predominantly followed Horn's rule in costly signaling games, best explained by focal point theory.
• In costless signaling, evolutionary game theory best explained results, with priming significantly affecting coordination on separating equilibria.
• Priming effects were also observed in costly signaling scenarios.

Conclusions:

• Focal point theory explains adherence to Horn's rule in costly signaling.
• Evolutionary game theory is key to understanding costless signaling and priming effects.
• Behavioral economics principles, including priming, significantly impact communication strategies even when signals are costly.