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Dynamic Coordination via Organizational Routines

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  • Blume, Andreas
  • Franco, April Mitchell
  • Heidhues, Paul

Abstract

We investigate dynamic coordination among members of a problem solving team who receive private signals about which of their actions are required for a (static) coordinated solution and who have repeated opportunities to explore different action combinations. In this environment ordinal equilibria, in which agents condition only on how their signals rank their actions and not on signal strength, lead to simple patterns of behavior that have a natural interpretation as routines. These routine spartially solve the team’s coordination problem by synchronizing the team’s search efforts and prove to be resilient to changes in the environment by being expost equilibria, to agents having only a coarse understanding of other agents’ strategies by being fully cursed, and to natural forms of agents’ overcon?dence. The price of this resilience is that optimal routines are frequently not optimal equilibria.

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Paper provided by Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich in its series Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems with number 355.

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Date of creation: Jan 2011
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Handle: RePEc:trf:wpaper:355

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  1. Jehiel, Philippe, 2005. "Analogy-based expectation equilibrium," Journal of Economic Theory, Elsevier, vol. 123(2), pages 81-104, August.
  2. Blume, Andreas & Heidhues, Paul, 2006. "Private monitoring in auctions," Journal of Economic Theory, Elsevier, vol. 131(1), pages 179-211, November.
  3. Andreas Blume & John Duffy, 2004. "Organizational Learning: An Experimental Investigation," 2004 Meeting Papers 617, Society for Economic Dynamics.
  4. Andreas Blume & John Duffy & April Mitchell Franco, 2008. "Decentralized Organizational Learning: An Experimental Investigation," Working Papers 382, University of Pittsburgh, Department of Economics, revised May 2009.
  5. Robert S. Gibbons, 2010. "Inside Organizations: Pricing, Politics, and Path Dependence," Levine's Working Paper Archive 661465000000000249, David K. Levine.
  6. Gossner, Olivier & Vieille, Nicolas, 2003. "Strategic learning in games with symmetric information," Games and Economic Behavior, Elsevier, vol. 42(1), pages 25-47, January.
  7. David A. Miller, 2012. "Robust Collusion with Private Information," Review of Economic Studies, Oxford University Press, vol. 79(2), pages 778-811.
  8. Banerjee, Abhijit V, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 797-817, August.
  9. Andreas Blume & April Franco, 2002. "Learning from failure," Staff Report 299, Federal Reserve Bank of Minneapolis.
  10. Thomas Wiseman, 2005. "A Partial Folk Theorem for Games with Unknown Payoff Distributions," Econometrica, Econometric Society, vol. 73(2), pages 629-645, 03.
  11. Sylvain Chassang, 2010. "Building Routines: Learning, Cooperation, and the Dynamics of Incomplete Relational Contracts," American Economic Review, American Economic Association, vol. 100(1), pages 448-65, March.
  12. Jacques Cremer & Luis Garicano & Andrea Prat, 2006. "Language and the Theory of the Firm," Levine's Bibliography 784828000000000373, UCLA Department of Economics.
  13. Blume, Andreas & Franco, April Mitchell, 2007. "Decentralized learning from failure," Journal of Economic Theory, Elsevier, vol. 133(1), pages 504-523, March.
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