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Common and almost common knowledge of credible assignments in a coordination game

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  • Ananish Chaudhuri

    ()
    (Department of Economics, University of Auckland)

  • Chenan Zhou

    ()
    (Department of Accounting and Finance, University of Auckland)

  • Parapin Prak

    ()
    (Department of Economics, University of Auckland)

  • Laura Bangun

    ()
    (Department of Economics, University of Auckland)

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    Abstract

    We build on Van Huyck, Gillette and Battalio (1992) and examine the efficacy of credible assignments in a stag-hunt type coordination game with two Pareto-ranked equilibria, one payoff dominant and the other risk dominant. The majority of our subjects fail to coordinate to the payoff dominant outcome when no assignment is made. However, the majority of them always coordinate to the payoff dominant outcome when an assignment is made. This happens regardless of whether the assignment is “almost common knowledge” or “common knowledge”.

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    Bibliographic Info

    Article provided by AccessEcon in its journal Economics Bulletin.

    Volume (Year): 3 (2006)
    Issue (Month): 1 ()
    Pages: 1-10

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    Handle: RePEc:ebl:ecbull:eb-05c90025

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    Related research

    Keywords: Coordination;

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    References

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    1. John B Van Huyck & Raymond C Battalio & Richard O Beil, 1997. "Tacit coordination games, strategic uncertainty, and coordination failure," Levine's Working Paper Archive 1225, David K. Levine.
    2. Cooper, Russell, et al, 1992. "Communication in Coordination Games," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 107(2), pages 739-71, May.
    3. Rubinstein, Ariel, 1989. "The Electronic Mail Game: Strategic Behavior under "Almost Common Knowledge."," American Economic Review, American Economic Association, American Economic Association, vol. 79(3), pages 385-91, June.
    4. Van Huyck, John B. & Gillette, Ann B. & Battalio, Raymond C., 1992. "Credible assignments in coordination games," Games and Economic Behavior, Elsevier, Elsevier, vol. 4(4), pages 606-626, October.
    5. Ondrej Rydval & Andreas Ortmann, 2004. "Loss avoidance as selection principle: evidence from simple stag-hunt games," CERGE-EI Working Papers wp245, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
    6. Cooper, Russell, et al, 1990. "Selection Criteria in Coordination Games: Some Experimental Results," American Economic Review, American Economic Association, American Economic Association, vol. 80(1), pages 218-33, March.
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    Cited by:
    1. Giovanna Devetag & Hykel Hosni & Giacomo Sillari, 2013. "You better play 7: mutual versus common knowledge of advice in a weak-link experiment," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 47260, London School of Economics and Political Science, LSE Library.
    2. Radu, Vranceanu & Besancenot, Damien & Dubart, Delphine, 2013. "Can Rumors and Other Uninformative Messages Cause Illiquidity ?," ESSEC Working Papers, ESSEC Research Center, ESSEC Business School WP1309, ESSEC Research Center, ESSEC Business School, revised Jun 2014.
    3. Dugar, Subhasish, 2010. "Nonmonetary sanctions and rewards in an experimental coordination game," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 73(3), pages 377-386, March.

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