Martin Dufwenberg, Purdue University & University of Gothenburg

"Credible Threats"

Abstract

We study the effect of communication on deterrence and costly punishment. We show that a theoretical model of belief-dependent anger captures the relationship between messages, beliefs, and behavior and implies that threats can generate credible commitments. We test our model in a between-subjects experiment with belief elicitation where one-sided communication is available as a treatment.

By Martin Dufwenberg (Purdue University and the University of Gothenburg), Flora Li & Alec Smith

Contact person: Egor Starkov