Videos Improve Attention and Cheap Talk in Online Surveys

Cheap Talk (CT) is a mainstay technique among stated preference practitioners to reduce Hypothetical Bias (HB). The usefulness of CT may be questionable in online surveys due to the limited control researchers have on participant engagement. In the context of an online choice experiment on hotels, we compare a control group of respondents who receives a CT script as a traditional passage of text versus a group who must answer an attention-check question to verify their comprehension of the script as well as another group who receives the CT script as a video and then answer the attention-check question. We find that compared to the control group, simply offering the attention-check question reduced willingness to pay (WTP), and those who answer the attention-check question correctly behaved differently to those who did not. Overall, video CT script is shown to improve attention and be more effective in reducing potential HB than a text-based script.

Are Housing Prices Sustainable in 35 Large and Medium-Sized Chinese Cities? A Study Based on the Cheap Talk Game and Dynamic GMM

Focusing on the rapid rise of China’s housing prices in recent years, in this paper, we construct a model using the cheap talk game that centers on how information receivers in a market make inferences about the true state of the information based on the cost-free signals they receive and then make decisions based on these inferences, which in turn affect market equilibrium. By constructing a cheap talk game model of house prices, we examine the correlation between market expectations, economic fundamentals, and individual housing purchase decisions. Then, we conduct an empirical analysis using the dynamic GMM method based on the panel data of 35 large and medium-sized cities in China. The analysis reveals that: (1) when the whole of society expects housing prices to rise, housing prices will rise regardless of the true state of economic fundamentals; (2) when information on economic fundamentals is accurate and reliable, home buyers tend to make purchase decisions based on such information, thus maximizing the utility of society as a whole; but when information on economic fundamentals is unreliable, home buyers tend to make purchase decisions according to their own housing price expectations, which is not conducive to the optimization of the utility of society as a whole; (3) the empirical results also reveal that expectations are a non-negligible factor in the rise of housing prices, and the coefficient of expectations exceeds that of each economic fundamental; this demonstrates the investment-driven attribute of the housing market in China. At the same time, economic fundamentals have a definite effect on housing prices, which implies that the rise of housing prices in China is supported by objective conditions.

Cheap talk or costly commitment? Leader statements and the implementation of civil war peace agreements

This article examines how leaders affect the implementation of peace agreements. It argues that implementation is more likely when leaders have publicly committed to peace because public commitments tie leaders’ hands, making it costly to back down from peaceful promises. This effect is hypothesized to hold even under conditions that make implementation costly: when implementing difficult provisions, when spoiler risk is high, and when implementation is unreciprocated. These expectations are tested using novel data from the IPAD dataset on the implementation of peace agreements between 1989 and 2014 and on public statements by state and rebel leaders. Results show that governments and rebel groups whose leaders have publicly committed to peace are significantly more likely to make progress toward implementation. This effect holds for difficult provisions, when spoiler risk is high, and when implementation is unreciprocated. These findings highlight the importance of leaders’ political will for successful implementation of peace agreements and sustainable peace.

Foreign Language Effect on Dishonesty

The purpose of this paper is to investigate whether the use of foreign languages affects individuals’ dishonesty. We recruited native Chinese speakers who can speak English as a foreign language at universities in China, and they were randomly assigned to a native language (NL) or foreign language (FL) condition. Participants in each condition were required to finish the same tasks, in which they would benefit more from lying; the tasks were administered in either Chinese or English. We conducted one die-roll game in Study 1 and one cheap-talk sender-receiver game in Study 2. In both Study 1 and Study 2, we found that the proportion of lying was significantly lower in the FL condition than in the NL condition. Our results imply that the FL effect on dishonesty may be due to the cognitive load of communicating in a FL.

Common Knowledge and Cheap Talk in Democratic Discourse and Law

This commentary illuminates key aspects of Shiffrin’s view by appeal to concrete examples and notions from game theory. It underscores the role of law as a means for the public communication of moral commitments by invoking the idea of common knowledge. Our commitments must be known to be shared, that knowledge itself must be known to be shared, and so on ad infinitum. This offers a perspective on the importance of common law from a democratic framework: common law can be seen as a mechanism for generating common knowledge about disputes and their resolution. The commentary invokes another game-theoretic notion, that of the contrast between cheap talk and costly signaling, to illuminate Shiffrin’s discussion of constitutional balancing. Where the interests of speaker and addressee are not aligned, cheap talk lacks credibility, and this is something to which courts need to be sensitive in balancing state and constitutional interests.