Inspired by the Salary History Bans, we designed a context-free lab experiment for a sender-receiver game to reflect the information transmission through the disclosure or non-disclosure of the past salary to the prospective employer before and after the ban under wage inequality.
Senders (applicants) have a true underlying secret number (type) and a color number (idiosyncratic noise term pertaining to historical factors about the past job) assigned to them each round. The summation of the secret number and the color number creates a message (past salary) that is the only available mean of communication between the sender and the receiver other than staying silent. There are two sender color groups (demographic groups). The color number distribution is right-skewed for one sender color group and left-skewed for the other. The support of the color number distribution has symmetric around 0 support for both groups. Receivers' (prospective employer) payoff increases with the accuracy of the guess, whereas senders' payoff increases with the guess itself.
Our main intervention is changing the information disclosure regime from mandatory disclosure (of the message) to voluntary disclosure.
Our experiment consists of 3 waves, in the first two waves we isolate sender groups in both information transmission regimes to test our behavioral model that is an extension of the cursed equilibrium. In the 3rd wave, we put together the two sender groups in two treatments, one for each information transmission regime for the analysis of sender welfare (guess).
Due to COVID-19 related measures, our experiment is going to be conducted online.