Bias in a Laboratory Simulation of a Signaling Game with Implications for the Influence of the News Media

Cai and Wang (2005) conducted a laboratory simulation of the Crawford-Sobel “strategic information transmission” game. The researchers were most interested in observing the amount of information that senders in the game transmitted to receivers. Consequently, they did not examine what I call the no-policy-bias implication of the game. This implication is that – as the Nash equilibria to the game predict – the final policy that receivers choose, in expectation, should equal the policy that they would have chosen if the senders had sent no signal. That is, the senders should not be able to systematically fool the receivers. Contrary to the Nash equlibria, however, all versions of the experiment produced a policy bias. The results can be explained by a well-established empirical regularity documented by behavioral economists. This is that people tend to under-estimate the degree to which other people are strategic. I apply these results to the question of media effects. The Cai-Wang results – as well as the models of behavioral economists – suggest that real-world journalists should indeed be able to significantly affect the thoughts and behavior of real-world news consumers