Competition as a Coordination Device
AbstractThe problem of coordination failure, particularly in "team production" situations, is central to a large number of mircroeconomic as well as macroeconomic models. As this type of inefficient coordination poses a severe economic problem, there is a need for institutions fostering efficient coordination of individual economic plans. In this paper, we introduce a rather classical such economic institution: 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 a appropriately designed meachnism of (inter-group) competition
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Bibliographic InfoPaper provided by Society for Computational Economics in its series Computing in Economics and Finance 2004 with number 196.
Date of creation: 11 Aug 2004
Date of revision:
coordination failure; team production; competition;
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- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
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- Gunnthorsdottir, Anna & Vragov, Roumen & Mccabe, Kevin, 2007. "The meritocracy as a mechanism to overcome social dilemmas," MPRA Paper 2454, University Library of Munich, Germany.
- Thomas Riechmann, 2005. "Dynamic Behavior in Minimum Effort Coordination Games - Some Theory of Group Size and Inter-Group Competition as Coordination Devices," Game Theory and Information 0503010, EconWPA.
- Daniel Zizzo, 2011. "You are not in my boat: common fate and discrimination against outgroup members," International Review of Economics, Springer, vol. 58(1), pages 91-103, March.
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