Can Cheap Talk Deter? An Experimental Analysis

What effect does cheap talk have on behavior in an entry-deterrence game? We shed light on this question using incentivized laboratory experiments of the strategic interaction between defenders and potential entrants. Our results suggest that cheap talk can have a substantial impact on the behavior of both the target and the speaker. By sending costless threats to potential entrants, defenders are able to deter opponents in early periods of play. Moreover, after issuing threats, defenders become more eager to fight. We offer a number of different explanations for this behavior. These results bring fresh evidence about the potential importance of costless verbal communication to the field of international relations.