Coordination with indirect messages in the stag-hunt game

Mürüvvet Büyükboyacı, Serkan Küçükşenel

Abstract


We theoretically investigate the effect of allowing one-sided communication with costless indirect messages on stag-hunt game outcomes. Since Heinemann et al. (2009) show that players who avoid risk also avoid strategic uncertainty, we chose a sender's level of risk aversion as the indirect message. We show that if both sender and receiver interpret the message content similarly, it is possible that they end up either on the risk-dominant or on the payoff-dominant equilibrium. We also show that players in the extreme risk groups are willing to declare risk attitudes truthfully to increase the probability of coordination. On the other hand, players in the medium risk averse group are willing to mimic the risk-loving group to achieve efficient coordination.


Keywords


Stag-hunt game, coordination, risk information, costless communication.

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