TY  - RPRT
        AU  - Dvorak, Fabian
AU  - Fehrler, Sebastian
        TI  - Negotiating Cooperation under Uncertainty: Communication in Noisy, Indefinitely Repeated Interactions
        PY  - 2018/Oct/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 11897
        UR  - https://www.iza.org/publications/dp11897
        AB  - Case studies of cartels and recent theory suggest that repeated communication is key for stable cooperation in environments where signals about others' actions are noisy. However, empirically the exact role of communication is not well understood. We study cooperation under different monitoring and communication structures in the laboratory. Under all monitoring structures - perfect, imperfect public, and imperfect private - communication boosts efficiency. However, under imperfect monitoring, where actions can only be observed with noise, cooperation is stable only when subjects can communicate before every round of the game. Beyond improving coordination, communication increases efficiency by making subjects' play more lenient and forgiving. We further find clear evidence for the exchange of private information - the central role ascribed to communication in recent theoretical contributions.
        KW  - cooperation
KW  - communication
KW  - monitoring
KW  - infinitely repeated games
KW  - strategic uncertainty
KW  - prisoner's dilemma
        ER  -