Why Would You Say that? The Effect of Adviser's Self-Interest on Credibility of Advice in Coordination Games

35 Pages Posted: 20 Aug 2003

See all articles by Xi (Jason) Kuang

Xi (Jason) Kuang

Georgia Institute of Technology - Scheller College of Business

Jason D. Dana

affiliation not provided to SSRN

Roberto A. Weber

University of Zurich - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: July 14, 2003

Abstract

Experimental research on the credibility of advice in coordination games shows that advice can have considerable influence on players' behavior, even when this advice conflicts with payoff-dominance. A crucial feature of this prior research, however, is that the adviser has no share in the final outcomes of the game. In most situations outside the laboratory where an adviser makes a recommendation, the adviser has interest in obtaining certain outcomes. At the very least, the players' perceptions of why the adviser is making the recommendation might be important in determining their behavior.

In this study, we investigate the credibility of non-binding advice in Pareto-ranked coordination games where the adviser does not make any strategy choice, but either does or does not have a stake in the final payoff of the game. In one version of our game, the adviser can receive a positive payoff only if the players forgo the payoff-dominant outcome. We find that the credibility of advice is affected by the adviser's motive. If the advice appears to be "self-interested" (i.e., attempting to implement an outcome that yields the highest payoff for the adviser), it is less credible than if the same advice is given by a neutral independent party who has no economic interest in the game.

Suggested Citation

Kuang, Xi (Jason) and Dana, Jason D. and Weber, Roberto A., Why Would You Say that? The Effect of Adviser's Self-Interest on Credibility of Advice in Coordination Games (July 14, 2003). Available at SSRN: https://ssrn.com/abstract=425480 or http://dx.doi.org/10.2139/ssrn.425480

Xi (Jason) Kuang (Contact Author)

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St., NW
Atlanta, GA 30308-1149
United States

Jason D. Dana

affiliation not provided to SSRN

Roberto A. Weber

University of Zurich - Department of Economics ( email )

Zuerich, 8006
Switzerland

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany