Betrayal of Intentions in 2-Player Games⇤

We introduce communication and with it the ability to deceive other players about a player’s own intentions into the standard model of 2-player strategic form games. Communication facilitates “commitment” that expands the set of equilibrium outcomes of the game. We show that successful costly deception may arise in equilibrium despite the inherent tension between successful costly deception and equilibrium play, which implies playing best response to the other player’s true strategy. Our model accounts for the significant levels of cooperation and correlation that are observed in experimental Prisoner’s Dilemma games with pre-play communication.