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Competition as a coordination device: Experimental evidence from a minimum effort coordination game

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  • Riechmann, Thomas
  • Weimann, Joachim

Abstract

This paper presents a means of fostering efficient coordination in minimum effort coordination games, inter-group competition. In a series of laboratory experiments, we reveal that the true reason for coordination failure is strategic uncertainty, which can be reduced almost completely by introducing an appropriately designed mechanism of (inter-group) competition. We uncover the reasons why competition works as a coordination device and how the mechanism of competition should be designed in order to achieve a maximum degree of efficiency.

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  • Riechmann, Thomas & Weimann, Joachim, 2008. "Competition as a coordination device: Experimental evidence from a minimum effort coordination game," European Journal of Political Economy, Elsevier, vol. 24(2), pages 437-454, June.
    • Handle: RePEc:eee:poleco:v:24:y:2008:i:2:p:437-454
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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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