Journal
AMERICAN ECONOMIC REVIEW
Volume 100, Issue 3, Pages 984-1007Publisher
AMER ECONOMIC ASSOC
DOI: 10.1257/aer.100.3.984
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We report experiments on sender-receiver games with an incentive for senders to exaggerate. Subjects overcommunicate-messages are more informative of the true state than they should be, in equilibrium. Eyetracking shows that senders look at payoffs in a way that is consistent with a level-k model. A combination of sender messages and lookup patterns predicts the true state about twice as often as predicted by equilibrium. Using these measures to infer the state would enable receiver subjects to hypothetically earn 16-21 percent more than they actually do, an economic value of 60 percent of the maximum increment.
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