Cheap Talk, Information, and Coordination - Experimental Evidence.

Costless and non-binding pre-play communication (cheap talk) has been found to often be effective in achieving efficient outcomes in experimental games. However, in previous two-player experimental games each player was informed about both his payoff and the action of the other player in the pair. In the field, people may engage in cheap talk and subsequently learn their payoffs, but frequently only learn their own payoffs and not the actions of other people. We model this uncertainty in the framework of a 2x2 coordination game, in which one choice leads to the same payoff regardless of the action of the other player.