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Communication and Early Contributions

Authors


  • Stefano Barbieri, Department of Economics, 206 Tilton Hall, Tulane University, New Orleans, LA 70118 (sbarbier@tulane.edu).

  • While retaining responsibility for any errors, I thank David Malueg and Andrew Postlewaite for their comments and suggestions. I am also grateful for the comments of an anonymous referee, of the associate editor, and of the editor, John Conley.

Abstract

In the context of the voluntary provision of a public good, I study the interaction of communication and dynamics in contributions. I modify the cheap talk, joint-project framework of Agastya, Menezes, and Sengupta (2007) by considering early contributions that precede communication and by assuming partially funded projects are not completely worthless. First, I show environments in which, without early contributions, parties cannot be trusted to communicate sincerely, so that the joint endeavor always fails. Then, for the same environments, I demonstrate that early contributions can create the conditions for mutual trust, improve the outcome of subsequent communication, and eventually increase welfare. This trust-building role of early contributions matches well with the aims that negotiation scholars attribute to preconditions for negotiations and to preliminary concessions.

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