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Strategic environment effect and communication
Published online by Cambridge University Press: 14 March 2025
Abstract
We study the interaction of the effects of the strategic environment and communication on the observed levels of cooperation in two-person finitely repeated games with a Pareto-inefficient Nash equilibrium and replicate previous findings that point to higher levels of tacit cooperation under strategic complementarity than under strategic substitutability. We find that this is not because of differences in the levels of reciprocity as previously suggested. Instead, we demonstrate that slow learning coupled with noisy choices may drive this effect. When subjects are allowed to communicate in free-form online chats before making choices, cooperation levels increase significantly to the extent that the difference between strategic complements and substitutes disappears. A machine-assisted natural language processing approach then shows how the content of communication is dependent on the strategic environment and cooperative behavior, and indicates that subjects in complementarity games reach full cooperation by agreeing on gradual moves toward it.
Keywords
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- Original Paper
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- Copyright © The Author(s), under exclusive licence to Economic Science Association 2022.
Footnotes
Supplementary Information The online version contains supplementary material available at https://doi.org/10.1007/s10683-022-09774-7.
Part of this work was carried out when N. Hanaki was affiliated with Université Côte d’Azur, CNRS, GREDEG, and when A. I. Ozkes was affiliated with the Aix-Marseille School of Economics, WU Vienna University of Economics and Business, and EMLV De Vinci Research Center. The authors thank these institutions for the supportive environments they provided. This research was supported by ANR grants Investissements d’Avenir under PSL
∗ MIFID (IDEX ANR-10-IDEX-0001-02), 
UCAJEDI (ANR-15-IDEX-01), an ORA-Plus project BEAM (ANR-15-ORAR-0004), EPURAI (ANR-21-MRS2-0027-01), JSPS Grants-in-Aid for Scientific Research (18K19954, 20H05631), JSPS Core-to-Core Program FY2020 project “Formation of an International Research Center for Experimental Financial Market”, financial aids from the Aix-Marseille School of Economics, De Vinci Research Center, and the Joint Usage/Research Center at ISER, Osaka University. The replication material for the study is available at https://doi.org/10.17605/OSF.IO/QXG8D.
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