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Cheap Talk and Coordination in the Lab and in the Field: Collective Commercialization in Senegal

Fo Kodjo Dzinyefa Aflagah, Tanguy Bernard, Angelino Viceisza

NBER Working Paper No. 26045
Issued in July 2019
NBER Program(s):Development Economics Program, Productivity, Innovation, and Entrepreneurship Program

Coordination is central to social interactions. Theory and conventional lab experiments suggest that cheap talk/communication can enhance coordination under certain conditions. Two aspects that remain underexplored are (1) the interaction between the number of players (group size) and communication and (2) how existing findings might play out in the field. We address both of these by studying a typical naturally-occurring setting that requires coordination; that is, one where members of agricultural cooperatives seek to jointly sell their output. Combining artefactual/lab-in-the-field experiments (LFEs), natural field experiments (RCTs), surveys, and cooperative records, we find that (1) revealing farmers' intended sales (i.e., cheap talk/communication) yields enhanced collective commercialization (i.e., coordination), particularly in larger groups; (2) such cheap talk may lead to higher incomes for small-scale farmers; (3) participants transfer learning from the LFEs thus affecting subsequent behavior in the RCTs (i.e., the day-to-day environment). Our results contribute to existing literature by highlighting the potential for cheap-talk institutions to (1) boost coordination, particularly in settings with greater strategic uncertainty (e.g., larger farmer cooperatives), and (2) promote collective entrepreneurship and development.

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Document Object Identifier (DOI): 10.3386/w26045

 
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