Vague Messages in Biased Information Transmission: Experiments and Theory

Spoken language allows for rich communication, but the message spaces used in most cheap talk models and experiments are usually quite restrictive. I show theoretically that introducing vague messages into a strategic information transmission game a la Crawford and Sobel (1982) increases communication between boundedly rational players if some senders are moderately honest. My model treats vague messages as explicitly imprecise messages, e.g., ”the state is 1, 2, or 3” in contrast to a precise message, which might say ”the state is 2”. Senders would like to bias the receivers’ beliefs upwards. Theoretically the introduction of vague messages causes more honest senders in some cases to send a truthful but vague message rather a precise lie. These message switches replace low-information lies with more informative message and have an additional indirect effect of making the remaining precise messages more informative as well. increasing how informative the average message is about the state. I test this prediction experimentally and find that messages are more likely to be truthful and to be believed credulously in a treatment where both kinds of messages can be sent. Finally I structurally estimate the parameters of my model, and find that about half of subjects get utility from truth-telling equal to around $0.30 (average earnings per round are around $0.70).