Cheap talk and coordination in the lab and in the field: Collective commercialization in Senegal

Abstract

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.

Got (Clean) Milk? Organization, Incentives, and Management in Indian Dairy Cooperatives

“…We randomly vary whether the contract and transfer are disclosed privately to managers alone or announced publicly to managers as well as cooperative members. Prior work has found trust in leadership to be a determining factor in sustaining collective action among smallholder farmers (Casaburi and Macchiavello, 2015;Bernard et al, 2021;Aflagah et al, 2022). This second manipulation gives insight into whether transparency can alleviate trust-based inefficiencies, and investigates how such transparency affects production outcomes and the distribution of surplus.…”