Essays on Experiments Examining Incomplete Contracting and Communication

Abstract

This manuscript explores how communication and commitment through a potentially incomplete contract impact decisions that people make. The first chapter in my dissertation explores the two problems simultaneously. The second chapter in my dissertation explores the impact that communication has using a cognitive hierarchy model, and the third chapter of my dissertation explores how players commit themselves when another person decides what happens in the cases that are not committed to. Across these projects, the two players playing have some conflict. When writing contracts there is a critical tension: If a person commits too much, they leave no room for flexibility. If a person commits too little, the other party will take advantage. Understanding how people weigh this key tension, understanding how partial commitment impacts communication, and understanding how communication impacts play are the goals of this dissertation. The first and second chapter make it clear that the setting of the game impacts how communication occurs. In experiments, a written contract changes the effectiveness of communication among subjects. An outguessing game causes messages to have more meaning than standard game theory would predict. The first and the third chapter find that players make different choices when the conflict of interest between the two players changes. I additionally find a strong behavioral influence of communication in my second chapter. These results, along with many others, are a deep exploration into how people write contracts and communication in a variety of settings.