Effect of communication in heterogeneous group contests: An experimental analysis

This study investigates how costless pre-play communication, cheap talk, affects group behaviour in Tullock contests where competing groups differ in unit cost of effort or prize valuation. We develop a theoretical model that extends the classic Tullock framework to incorporate heterogeneity and informational asymmetries, deriving equilibrium predictions under both com- plete and incomplete information. To test these predictions, we performed a laboratory experiment using a 2×2×2 design that varies communication (chat vs. no chat), information (complete vs. incomplete) and heterogeneity (cost vs. value). The results reveal that communication improves coordina- tion and increases the effort of the group under complete information. In contrast, under incomplete information, communication reduces group ef- fort, particularly for advantaged groups, suggesting that uncertainty and miscoordination may outweigh the benefits of cheap talk. We also find that communication reduces overbidding and rent dissipation in contests with informational frictions. These findings provide the first empirical evidence on how communication interacts with group asymmetries and informational structure in contests, with significant implications for institutional design. In environments like lobbying, collaborative innovation, or public procurement, the regulation of communication should be tailored to the nature of strategic uncertainty and incentive asymmetries to promote effcient collective action. PACS: 0000, 1111 2000 MSC: 0000, 1111