Words, deeds and lies: strategic behaviour in games with multiple signals

John Duffy and Nick Feltovich

We report the results of an experiment in which subjects play games repeatedly against changing opponents. In one treatment, "senders" send messages to "receivers" indicating intended actions in that round, and receivers observe senders' previous-round actions (when matched with another receiver). In another treatment, the receiver additionally observes the sender's previous-round message to the previous opponent, enabling him to determine whether the sender lied in the previous round. We find that allowing more than one signal leads to better outcomes when signals are aligned (all pointing to the same action), but worse outcomes when signals are crossed. We also find that senders' signals tend to be truthful, though the degree of truthfulness depends on the game and treatment, and receivers' behavior combines elements of payoff maximization and reciprocity.

Duffy, John and Nick Feltovich (2006), "Words, deeds, and lies: strategic behaviour in games with multiple signals", The Review of Economic Studies 73 (3), pp. 669-688. DOI: 10.1111/j.1467-937X.2006.00391.x