[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/ess/wpaper/id9907.html
   My bibliography  Save this paper

Gossip and the Efficiency of Interactions

Author

Listed:
  • Matthias Sutter
  • Dietmar Fehr
Abstract
Human communication in organizations often involves a large amount of gossiping about others. Here we study in an experiment whether gossip affects the efficiency of human interactions. We let subjects play a trust game. Third parties observe a trustee’s behavior and can gossip about it by sending a message to the trustor with whom the observed trustee will be paired (for the first time) in the next round. While messages are non-verifiable and sometimes also incorrect, the possibility of gossip is highly efficiency-increasing compared to a situation without any gossip. In two further control treatments, we show that the mere fact of being observed by third parties cannot explain the efficiency-increasing effect of gossip, and that noisy gossip (where information transmission from third parties to trustors can fail) still increases efficiency, but less so than if information transmission is undisturbed.

Suggested Citation

  • Matthias Sutter & Dietmar Fehr, 2016. "Gossip and the Efficiency of Interactions," Working Papers id:9907, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:9907
    Note: Institutional Papers
    as

    Download full text from publisher

    File URL: http://www.esocialsciences.org/Articles/show_Article.aspx?acat=InstitutionalPapers&aid=9907
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Yoav Benjamini & Abba M. Krieger & Daniel Yekutieli, 2006. "Adaptive linear step-up procedures that control the false discovery rate," Biometrika, Biometrika Trust, vol. 93(3), pages 491-507, September.
    2. Anderson, Michael L., 2008. "Multiple Inference and Gender Differences in the Effects of Early Intervention: A Reevaluation of the Abecedarian, Perry Preschool, and Early Training Projects," Journal of the American Statistical Association, American Statistical Association, vol. 103(484), pages 1481-1495.
    3. Ernst Fehr & Urs Fischbacher, "undated". "Third Party Punishment and Social Norms," IEW - Working Papers 106, Institute for Empirical Research in Economics - University of Zurich.
    4. Engelmann, Dirk & Fischbacher, Urs, 2009. "Indirect reciprocity and strategic reputation building in an experimental helping game," Games and Economic Behavior, Elsevier, vol. 67(2), pages 399-407, November.
    5. Charness, Gary & Dufwenberg, Martin, 2003. "Promises & Partnership," Research Papers in Economics 2003:3, Stockholm University, Department of Economics.
    6. Ariel Rubinstein, 2007. "Instinctive and Cognitive Reasoning: A Study of Response Times," Economic Journal, Royal Economic Society, vol. 117(523), pages 1243-1259, October.
    7. Sutter, Matthias & Kocher, Martin G., 2007. "Trust and trustworthiness across different age groups," Games and Economic Behavior, Elsevier, vol. 59(2), pages 364-382, May.
    8. Oprea, Ryan & Charness, Gary & Friedman, Daniel, 2014. "Continuous time and communication in a public-goods experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 108(C), pages 212-223.
    9. Kenju Kamei & Louis Putterman, 2013. "Play it Again: Partner Choice, Reputation Building and Learning in Restarting, Finitely-Repeated Dilemma Games," Working Papers 2013-8, Brown University, Department of Economics.
    10. Bochet, Olivier & Page, Talbot & Putterman, Louis, 2006. "Communication and punishment in voluntary contribution experiments," Journal of Economic Behavior & Organization, Elsevier, vol. 60(1), pages 11-26, May.
    11. Nikos Nikiforakis & Helen Mitchell, 2014. "Mixing the carrots with the sticks: third party punishment and reward," Experimental Economics, Springer;Economic Science Association, vol. 17(1), pages 1-23, March.
    12. Ben Greiner, 2015. "Subject pool recruitment procedures: organizing experiments with ORSEE," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 1(1), pages 114-125, July.
    13. Martin Brown & Christian Zehnder, 2007. "Credit Reporting, Relationship Banking, and Loan Repayment," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(8), pages 1883-1918, December.
    14. Bou{g}açhan Çelen & Shachar Kariv & Andrew Schotter, 2010. "An Experimental Test of Advice and Social Learning," Management Science, INFORMS, vol. 56(10), pages 1687-1701, October.
    15. Charness, Gary & Cobo-Reyes, Ramón & Jiménez, Natalia, 2008. "An investment game with third-party intervention," Journal of Economic Behavior & Organization, Elsevier, vol. 68(1), pages 18-28, October.
    16. Martin Sefton & Robert Shupp & James M. Walker, 2007. "The Effect Of Rewards And Sanctions In Provision Of Public Goods," Economic Inquiry, Western Economic Association International, vol. 45(4), pages 671-690, October.
    17. Charness, Gary & Du, Ninghua & Yang, Chun-Lei, 2011. "Trust and trustworthiness reputations in an investment game," Games and Economic Behavior, Elsevier, vol. 72(2), pages 361-375, June.
    18. Huck, Steffen & Lünser, Gabriele K. & Tyran, Jean-Robert, 2012. "Competition fosters trust," Games and Economic Behavior, Elsevier, vol. 76(1), pages 195-209.
    19. La Porta, Rafael, et al, 1997. "Trust in Large Organizations," American Economic Review, American Economic Association, vol. 87(2), pages 333-338, May.
    20. Gary E. Bolton & Elena Katok & Axel Ockenfels, 2004. "How Effective Are Electronic Reputation Mechanisms? An Experimental Investigation," Management Science, INFORMS, vol. 50(11), pages 1587-1602, November.
    21. Crawford, Vincent, 1998. "A Survey of Experiments on Communication via Cheap Talk," Journal of Economic Theory, Elsevier, vol. 78(2), pages 286-298, February.
    22. Johnson, Noel D. & Mislin, Alexandra A., 2011. "Trust games: A meta-analysis," Journal of Economic Psychology, Elsevier, vol. 32(5), pages 865-889.
    23. Isaac, R Mark & Walker, James M, 1988. "Communication and Free-Riding Behavior: The Voluntary Contribution Mechanism," Economic Inquiry, Western Economic Association International, vol. 26(4), pages 585-608, October.
    24. Bochet, Olivier & Putterman, Louis, 2009. "Not just babble: Opening the black box of communication in a voluntary contribution experiment," European Economic Review, Elsevier, vol. 53(3), pages 309-326, April.
    25. David G. Rand & Joshua D. Greene & Martin A. Nowak, 2012. "Spontaneous giving and calculated greed," Nature, Nature, vol. 489(7416), pages 427-430, September.
    26. Gary Charness & Martin Dufwenberg, 2006. "Promises and Partnership," Econometrica, Econometric Society, vol. 74(6), pages 1579-1601, November.
    27. Iris Bohnet & Steffen Huck, 2004. "Repetition and Reputation: Implications for Trust and Trustworthiness When Institutions Change," American Economic Review, American Economic Association, vol. 94(2), pages 362-366, May.
    28. Balafoutas, Loukas & Nikiforakis, Nikos, 2012. "Norm enforcement in the city: A natural field experiment," European Economic Review, Elsevier, vol. 56(8), pages 1773-1785.
    29. Huck, Steffen & Lünser, Gabriele K. & Tyran, Jean-Robert, 2010. "Consumer networks and firm reputation: A first experimental investigation," Economics Letters, Elsevier, vol. 108(2), pages 242-244, August.
    30. Charness, Gary & Yang, Chun-Lei, 2014. "Starting small toward voluntary formation of efficient large groups in public goods provision," Journal of Economic Behavior & Organization, Elsevier, vol. 102(C), pages 119-132.
    31. Gustav Tinghög & David Andersson & Caroline Bonn & Harald Böttiger & Camilla Josephson & Gustaf Lundgren & Daniel Västfjäll & Michael Kirchler & Magnus Johannesson, 2013. "Intuition and cooperation reconsidered," Nature, Nature, vol. 498(7452), pages 1-2, June.
    32. Greiff, Matthias & Paetzel, Fabian, 2016. "Second-order beliefs in reputation systems with endogenous evaluations – an experimental study," Games and Economic Behavior, Elsevier, vol. 97(C), pages 32-43.
    33. Giorgio Coricelli & Dietmar Fehr & Gerlinde Fellner, 2004. "Partner Selection in Public Goods Experiments," Journal of Conflict Resolution, Peace Science Society (International), vol. 48(3), pages 356-378, June.
    34. Stahl, Dale O., 2013. "An experimental test of the efficacy of a simple reputation mechanism to solve social dilemmas," Journal of Economic Behavior & Organization, Elsevier, vol. 94(C), pages 116-124.
    35. David Masclet & Thierry P鮡rd, 2012. "Do reputation feedback systems really improve trust among anonymous traders? An experimental study," Applied Economics, Taylor & Francis Journals, vol. 44(35), pages 4553-4573, December.
    36. Seinen, Ingrid & Schram, Arthur, 2006. "Social status and group norms: Indirect reciprocity in a repeated helping experiment," European Economic Review, Elsevier, vol. 50(3), pages 581-602, April.
    37. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
    38. Ben-Ner, Avner & Putterman, Louis, 2009. "Trust, communication and contracts: An experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 70(1-2), pages 106-121, May.
    39. Nicholas Bloom & Raffaella Sadun, 2012. "The Organization of Firms Across Countries," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(4), pages 1663-1705.
    40. Barton H. Hamilton & Jack A. Nickerson & Hideo Owan, 2003. "Team Incentives and Worker Heterogeneity: An Empirical Analysis of the Impact of Teams on Productivity and Participation," Journal of Political Economy, University of Chicago Press, vol. 111(3), pages 465-497, June.
    41. Helen Mitchell & Nikos Nikiforakis, 2014. "Mixing the Carrots with the Sticks: Third Party Punishment and Reward," Post-Print halshs-00811992, HAL.
    42. John Duffy & Huan Xie & Yong-Ju Lee, 2013. "Social norms, information, and trust among strangers: theory and evidence," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 52(2), pages 669-708, March.
    43. Loukas Balafoutas & Nikos Nikiforakis & Bettina Rockenbach, 2014. "Direct and indirect punishment among strangers in the field," Natural Field Experiments 00637, The Field Experiments Website.
    44. Iris Bohnet & Heike Harmgart & Steffen Huck & Jean-Robert Tyran, 2005. "Learning Trust," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 322-329, 04/05.
    45. Talbot Page & Louis Putterman & Bulent Unel, 2005. "Voluntary Association in Public Goods Experiments: Reciprocity, Mimicry and Efficiency," Economic Journal, Royal Economic Society, vol. 115(506), pages 1032-1053, October.
    46. Charness, Gary & Dufwenberg, Martin, 2010. "Bare promises: An experiment," Economics Letters, Elsevier, vol. 107(2), pages 281-283, May.
    47. Kenju Kamei & Louis Putterman, 2017. "Play It Again: Partner Choice, Reputation Building and Learning From Finitely repeated Dilemma Games," Economic Journal, Royal Economic Society, vol. 127(602), pages 1069-1095, June.
    48. John Duffy & Nick Feltovich, 2006. "Words, Deeds, and Lies: Strategic Behaviour in Games with Multiple Signals," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 73(3), pages 669-688.
    49. Knez, Marc & Simester, Duncan, 2001. "Firm-Wide Incentives and Mutual Monitoring at Continental Airlines," Journal of Labor Economics, University of Chicago Press, vol. 19(4), pages 743-772, October.
    50. Andrew Schotter, 2005. "Decision Making with Naïve Advice," Springer Books, in: Amnon Rapoport & Rami Zwick (ed.), Experimental Business Research, chapter 0, pages 223-248, Springer.
    51. Ernst Fehr & Urs Fischbacher, 2003. "The nature of human altruism," Nature, Nature, vol. 425(6960), pages 785-791, October.
    52. Abraham, Martin & Grimm, Veronika & Neeß, Christina & Seebauer, Michael, 2016. "Reputation formation in economic transactions," Journal of Economic Behavior & Organization, Elsevier, vol. 121(C), pages 1-14.
    53. Bracht, Juergen & Feltovich, Nick, 2009. "Whatever you say, your reputation precedes you: Observation and cheap talk in the trust game," Journal of Public Economics, Elsevier, vol. 93(9-10), pages 1036-1044, October.
    54. Leibbrandt, Andreas & López-Pérez, Raúl, 2012. "An exploration of third and second party punishment in ten simple games," Journal of Economic Behavior & Organization, Elsevier, vol. 84(3), pages 753-766.
    55. Kenju Kamei & Louis Putterman, 2017. "Play It Again: Partner Choice, Reputation Building and Learning From Finitely repeated Dilemma Games," Economic Journal, Royal Economic Society, vol. 127(602), pages 1069-1095, June.
    56. Duffy, John & Feltovich, Nick, 2002. "Do Actions Speak Louder Than Words? An Experimental Comparison of Observation and Cheap Talk," Games and Economic Behavior, Elsevier, vol. 39(1), pages 1-27, April.
    57. T. Parker Ballinger & Michael G. Palumbo & Nathaniel T. Wilcox, 2003. "Precautionary saving and social learning across generations: an experiment," Economic Journal, Royal Economic Society, vol. 113(490), pages 920-947, October.
    58. Ariel Rubinstein, 2007. "Instinctive and Cognitive Reasoning: Response Times Study," Levine's Bibliography 321307000000001011, UCLA Department of Economics.
    59. Berg Joyce & Dickhaut John & McCabe Kevin, 1995. "Trust, Reciprocity, and Social History," Games and Economic Behavior, Elsevier, vol. 10(1), pages 122-142, July.
    60. Ronald S. Burt & Marc Knez, 1995. "Kinds of Third-Party Effects on Trust," Rationality and Society, , vol. 7(3), pages 255-292, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Greiff, Matthias & Paetzel, Fabian, 2020. "Information about average evaluations spurs cooperation: An experiment on noisy reputation systems," Journal of Economic Behavior & Organization, Elsevier, vol. 180(C), pages 334-356.
    2. Fonseca, Miguel A. & Peters, Kim, 2018. "Will any gossip do? Gossip does not need to be perfectly accurate to promote trust," Games and Economic Behavior, Elsevier, vol. 107(C), pages 253-281.
    3. Zou, Wenbo & Wang, Jinjie & Yan, Jubo, 2022. "Online markets and trust," Journal of Economic Behavior & Organization, Elsevier, vol. 201(C), pages 395-412.
    4. Campbell, Sandy & Gneezy, Uri, 2024. "Smartphone use decreases trustworthiness of strangers," Journal of Economic Psychology, Elsevier, vol. 102(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zakaria Babutsidze & Nobuyuki Hanaki & Adam Zylbersztejn, 2021. "Nonverbal content and trust: An experiment on digital communication," Economic Inquiry, Western Economic Association International, vol. 59(4), pages 1517-1532, October.
    2. Zakaria Babutsidze & Nobuyuki Hanaki & Adam Zylbersztejn, 2020. "Nonverbal content and swift trust: An experiment on digital communication," Working Papers 2008, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    3. Fortuna Casoria & Arno Riedl & Peter Werner, 2020. "Behavioral Aspects of Communication in Organizations," Post-Print halshs-03024050, HAL.
    4. Greiff, Matthias & Paetzel, Fabian, 2016. "Second-order beliefs in reputation systems with endogenous evaluations – an experimental study," Games and Economic Behavior, Elsevier, vol. 97(C), pages 32-43.
    5. Gary Bolton & Kevin Breuer & Ben Greiner & Axel Ockenfels, 2023. "Fixing feedback revision rules in online markets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 32(2), pages 247-256, April.
    6. Zakaria Babutsidze & Nobuyuki Hanaki & Adam Zylbersztejn, 2019. "Digital Communication and Swift Trust," SciencePo Working papers Main halshs-02050514, HAL.
    7. Bracht, Juergen & Feltovich, Nick, 2009. "Whatever you say, your reputation precedes you: Observation and cheap talk in the trust game," Journal of Public Economics, Elsevier, vol. 93(9-10), pages 1036-1044, October.
    8. Servátka, Maroš & Tucker, Steven & Vadovič, Radovan, 2011. "Words speak louder than money," Journal of Economic Psychology, Elsevier, vol. 32(5), pages 700-709.
    9. Lei, Vivian & Masclet, David & Vesely, Filip, 2014. "Competition vs. communication: An experimental study on restoring trust," Journal of Economic Behavior & Organization, Elsevier, vol. 108(C), pages 94-107.
    10. Eric Cardella, 2016. "Exploiting the guilt aversion of others: do agents do it and is it effective?," Theory and Decision, Springer, vol. 80(4), pages 523-560, April.
    11. Simon Gaechter & Benedikt Herrmann, 2008. "Reciprocity, culture, and human cooperation: Previous insights and a new cross-cultural experiment," Discussion Papers 2008-14, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    12. Brown, Martin & Schmitz, Jan & Zehnder, Christian, 2024. "Communication and hidden action: A credit market experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 218(C), pages 423-455.
    13. Simon Gaechter & Benedikt Herrmann, 2008. "Reciprocity, culture, and human cooperation: Previous insights and a new cross-cultural experiment," Discussion Papers 2008-14, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    14. Feltovich, Nick & Grossman, Philip J., 2015. "How does the effect of pre-play suggestions vary with group size? Experimental evidence from a threshold public-good game," European Economic Review, Elsevier, vol. 79(C), pages 263-280.
    15. Michalis Drouvelis & Brit Grosskopf, 2021. "The impact of smiling cues on social cooperation," Southern Economic Journal, John Wiley & Sons, vol. 87(4), pages 1390-1404, April.
    16. Serra Garcia, M. & van Damme, E.E.C. & Potters, J.J.M., 2010. "Which Words Bond? An Experiment on Signaling in a Public Good Game (replaced by TILEC DP 2011-055)," Other publications TiSEM 5ed24dc3-e6cf-4fa4-bace-2, Tilburg University, School of Economics and Management.
    17. Sofianos, Andis, 2022. "Self-reported & revealed trust: Experimental evidence," Journal of Economic Psychology, Elsevier, vol. 88(C).
    18. Serra Garcia, M. & van Damme, E.E.C. & Potters, J.J.M., 2011. "Lying About What you Know or About What you Do? (replaces CentER DP 2010-033)," Discussion Paper 2011-139, Tilburg University, Center for Economic Research.
    19. Maroš Servátka & Steven Tucker & Radovan Vadovič, 2011. "Building Trust—One Gift at a Time," Games, MDPI, vol. 2(4), pages 1-22, September.
    20. Huck, Steffen & Lünser, Gabriele K. & Tyran, Jean-Robert, 2012. "Competition fosters trust," Games and Economic Behavior, Elsevier, vol. 76(1), pages 195-209.

    More about this item

    Keywords

    human communication; gossip; efficiency; human interactions; third party; control treatment; noisy gossip; information transmission; trust game; efficiency; experiment;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ess:wpaper:id:9907. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Padma Prakash (email available below). General contact details of provider: http://www.esocialsciences.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.