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Can there be a market for cheap-talk information? An experimental investigation

Cabrales, A; Feri, F; Gottardi, P; Meléndez-Jiménez, MA; (2020) Can there be a market for cheap-talk information? An experimental investigation. Games and Economic Behavior , 121 pp. 368-381. 10.1016/j.geb.2020.03.002. Green open access

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Abstract

This paper reports on experiments testing the viability of markets for cheap-talk information. We find that the level of trade in these markets is very small and eventually vanishes. Sellers provide low-quality information even when doing so does not increase their monetary payoff. This contributes to the low demand in the market for information. Moreover, we observe the same very low level of activity in the market for information when sellers face no conflict of interest and the noise in the quality of the transmitted information is much lower. Hence, we argue that the collapse of the market for information is a demand phenomenon, and even small uncertainty over the quality of information seems to have a large impact.

Type: Article
Title: Can there be a market for cheap-talk information? An experimental investigation
Open access status: An open access version is available from UCL Discovery
DOI: 10.1016/j.geb.2020.03.002
Publisher version: https://doi.org/10.1016/j.geb.2020.03.002
Language: English
Additional information: This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
Keywords: Experiment, Cheap talk, Auction, Information acquisition, Information sale
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/10096407
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