Risk, pre-play communication and equilibrium

We report an experiment with a 3 x 3 game with a unique and efficient equilibrium. However, each player's equilibrium strategy may result in a very low payoff if the other player does not use her equilibrium strategy. Players can avoid this possibility by playing an alternative safe strategy. When players have no opportunity for pre-play communication over 80% of subjects choose the safe strategy. However, we observe substantial increases in the amount of equilibrium play when (i) the riskiness of the equilibrium strategy is reduced, and (ii) subjects have opportunities to send non-binding, costless, messages to one another prior to playing the game. (C) 2003 Elsevier Inc. All rights reserved.