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Coordination and Information in Critical Mass Games: An Experimental Study

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  • Giovanna Devetag

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Abstract

We present experimental results on a repeated coordination game with Pareto-ranked equilibria in which a payoff from choosing an action is positive only if a critical mass of players choose that action. We design a baseline version of the game in which payoffs remain constant for values above the critical mass, and an increasing returns version in which payoffs keep increasing for values above the critical mass. We test the predictive power of security and payoff-dominance under different information treatments. Our results show that convergence to the payoff-dominant equilibrium is the modal limit outcome when players have full information about others' previous round choices, while this outcome never occurs in the remaining treatments. The paths of play in some groups reveal a tacit dynamic coordination by which groups converge to the efficient equilibrium in a step-like manner. Moreover, the frequency and speed of convergence to the payoff-dominant equilibrium are higher, ceteris paribus, when increasing returns are present. Finally, successful coordination seems to crucially depend on players' willingness to signal to others the choice of the action supporting the efficient equilibrium. Copyright Kluwer Academic Publishers 2003

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File URL: http://hdl.handle.net/10.1023/A:1024252725591
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Bibliographic Info

Article provided by Springer in its journal Experimental Economics.

Volume (Year): 6 (2003)
Issue (Month): 1 (June)
Pages: 53-73

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Handle: RePEc:kap:expeco:v:6:y:2003:i:1:p:53-73

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Web page: http://www.springerlink.com/link.asp?id=102888

Related research

Keywords: coordination; critical mass; information; learning; signaling;

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Citations

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Cited by:
  1. Vranceanu, Radu & Besancenot, Damien, 2011. "Experimental Evidence on the ‘Insidious’ Illiquidity Risk," ESSEC Working Papers WP1107, ESSEC Research Center, ESSEC Business School.
  2. Francesco Feri & Bernd Irlenbusch & Matthias Sutter, 2010. "Efficiency Gains from Team-Based Coordination—Large-Scale Experimental Evidence," American Economic Review, American Economic Association, vol. 100(4), pages 1892-1912, September.
  3. Devetag, Giovanna, 2005. "Precedent transfer in coordination games: An experiment," Economics Letters, Elsevier, vol. 89(2), pages 227-232, November.
  4. Al-Ubaydli, Omar & Jones, Garett & Weel, Jaap, 2010. "Patience, cognitive skill and coordination in the repeated stag hunt," MPRA Paper 27723, University Library of Munich, Germany.
  5. Damien Besancenot & Radu Vranceanu, 2011. "Experimental Evidence On The 'Insidious' Illiquidity Risk," Working Papers halshs-00602107, HAL.
  6. Blume, Andreas & Ortmann, Andreas, 2007. "The effects of costless pre-play communication: Experimental evidence from games with Pareto-ranked equilibria," Journal of Economic Theory, Elsevier, vol. 132(1), pages 274-290, January.
  7. Mak, Vincent & Zwick, Rami, 2010. "Investment decisions and coordination problems in a market with network externalities: An experimental study," Journal of Economic Behavior & Organization, Elsevier, vol. 76(3), pages 759-773, December.
  8. Viktoriya Semeshenko & Alexis Garapin & Bernard Ruffieux & Mirta Gordon, 2010. "Information-driven coordination: experimental results with heterogeneous individuals," Theory and Decision, Springer, vol. 69(1), pages 119-142, July.

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