Beliefs about one’s own relative skill matter for many economic decisions. Yet, little is known about how these beliefs affect communication, especially the decision to talk - instead of letting other people do the talking. I use a laboratory experiment to investigate whether overconfidence leads to less successful conversations. In a communication game with aligned incentives, two senders try to inform a receiver. The accuracy of each sender’s information depends on [...]
Our experiment measures belief hierarchies regarding a message that may be a lie. In a two-player communication game between a sender and a receiver, the sender knows the state of the world and has a transparent incentive to deceive the receiver. The receiver chooses a binary reaction. For a wide set of non-equilibrium beliefs, the reaction and the receiver's second-order belief should dissonate: she should follow the sender's statement if and only if she believes that [...]
The rational expectations assumption, e.g. in life-cycle models and portfolio-choice models, prescribes that all actions are in line with a well-structured and unbiased system of expectations. In reality, justification and identification of expectations are nontrivial, and we lack empirical evidence especially for the long run. This paper starts to fill this gap and elicits short-run and long-run expectations of a sample of households that is designed to be representative of [...]