Coordination failure caused by sunspots
AbstractIn a coordination game with Pareto-ranked equilibria, we study whether a sunspot can lead to either coordination on an inferior equilibrium (mis-coordination) or to out-of equilibrium behavior (dis-coordination). While much of the literature searches for mechanisms to attain coordination on the efficient equilibrium, we consider sunspots as a potential reason for coordination failure. We conduct an experiment with a three player 2x2x2 game in which coordination on the efficient equilibrium is easy and should normally occur. In the control session, we find almost perfect coordination on the payoff-dominant equilibrium, but in the sunspot treatment, dis-coordination is frequent. Sunspots lead to significant inefficiency, and we conclude that sunspots can indeed cause coordination failure.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by AccessEcon in its journal Economics Bulletin.
Volume (Year): 32 (2012)
Issue (Month): 4 ()
Contact details of provider:
sunspots; coordination game; multiple Pareto-ranked equilibria; experiment;
Find related papers by JEL classification:
- C9 - Mathematical and Quantitative Methods - - Design of Experiments
- C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- John C. Harsanyi & Reinhard Selten, 1988. "A General Theory of Equilibrium Selection in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582384, January.
- Kuang, Xi (Jason) & Weber, Roberto A. & Dana, Jason, 2007. "How effective is advice from interested parties?: An experimental test using a pure coordination game," Journal of Economic Behavior & Organization, Elsevier, vol. 62(4), pages 591-604, April.
- John Duffy & Nick Feltovich, 2008.
"Correlated Equilibria, Good and Bad: An Experimental Study,"
358, University of Pittsburgh, Department of Economics, revised Oct 2008.
- John Duffy & Nick Feltovich, 2010. "Correlated Equilibria, Good And Bad: An Experimental Study," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 51(3), pages 701-721, 08.
- Duffy, John & Feltovich, Nick, 2010. "Correlated equilibria, good and bad: an experimental study," SIRE Discussion Papers 2010-123, Scottish Institute for Research in Economics (SIRE).
- Harrison, Sharon G & Weder, Mark, 2002.
"Did Sunspot Forces Cause the Great Depression?,"
CEPR Discussion Papers
3267, C.E.P.R. Discussion Papers.
- Cason, Timothy N. & Sharma, Tridib, 2006.
"Recommended Play and Correlated Equilibria: An Experimental Study,"
Purdue University Economics Working Papers
1191, Purdue University, Department of Economics.
- Timothy Cason & Tridib Sharma, 2007. "Recommended play and correlated equilibria: an experimental study," Economic Theory, Springer, vol. 33(1), pages 11-27, October.
- Jordi Brandts & David J. Cooper & Enrique Fatas, 2006.
"Leadership and Overcoming Coordination Failure with Asymmetric Costs,"
UFAE and IAE Working Papers
691.07, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Jordi Brandts & David Cooper & Enrique Fatas, 2007. "Leadership and overcoming coordination failure with asymmetric costs," Experimental Economics, Springer, vol. 10(3), pages 269-284, September.
- Jordi Brandts & David J. Cooper & Enrique Fatas, 2006. "Leadership and Overcoming Coordination Failure with Asymmetric Costs," Working Papers 298, Barcelona Graduate School of Economics.
- Heinemann, Frank & Llorente-Saguer, Aniol & Fehr, Dietmar, 2011.
"The Power of Sunspots: An Experimental Analysis,"
Annual Conference 2011 (Frankfurt, Main): The Order of the World Economy - Lessons from the Crisis
48724, Verein für Socialpolitik / German Economic Association.
- Dietmar Fehr & Frank Heinemann & Aniol Llorente-Saguer, 2011. "The Power of Sunspots: An Experimental Analysis," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2011_33, Max Planck Institute for Research on Collective Goods.
- Dietmar Fehr & Frank Heinemann & Aniol Llorente-Saguer, 2011. "The Power of Sunspots: An Experimental Analysis," SFB 649 Discussion Papers SFB649DP2011-070, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
- Dietmar Fehr & Frank Heinemann & Aniol Llorente-Saguer, 2013. "The power of sunspots: an experimental analysis," Working Papers 13-2, Federal Reserve Bank of Boston.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (John P. Conley).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.