Talkin' Bout Cooperation

We experimentally study the interaction of the effects of the strategic environment and com-
munication on the observed levels of cooperation in two-person finitely repeated games with a
Pareto-inefficient Nash equilibrium. We replicate previous findings that point to higher levels of
tacit cooperation under strategic complementarity compared to strategic substitution. In our data,
however, this is not due to differences in levels of reciprocity as suggested previously. Instead,
we find that slow learning and noisy choices might drive this effect. When subjects are allowed to
communicate in free-form online chat before making choices, cooperation levels increase
significantly to the extent that the difference in the two strategic environments dis- appears. A
machine-assisted natural language processing approach shows how the content of
communication differs in the two strategic environments.