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Imitation and the Role of Information in Overcoming Coordination Failures

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We model the structure of a firm or an organization as a network and consider minimum-effort games played on this network as a metaphor for cooperations failing due to coordination failures. For a family of behavioral rules, including Imitate the Best and the Proportional Imitation Rule, we show that inefficient conventions arise independently of the interaction structure, if information is limited to the interaction neighborhoods. However, in the presence of informational spillovers, a minimal condition on the network guarantees that efficient conventions will eventually dominate. An analogous result is established for average opinion games.

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Paper provided by University of Vienna, Department of Economics in its series Vienna Economics Papers with number 1008.

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Date of creation: Sep 2010
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Handle: RePEc:vie:viennp:1008

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  1. Jeffrey C. Ely, 2002. "Local Conventions," Discussion Papers 1349, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  2. Apesteguia, Jose & Huck, Steffen & Oechssler, Joerg, 2003. "Imitation - Theory and Experimental Evidence," University of California at Santa Barbara, Economics Working Paper Series qt3h0887tj, Department of Economics, UC Santa Barbara.
  3. Antonio Cabrales & Raffaele Miniaci & Marco Piovesan & Giovanni Ponti, 2010. "Social Preferences and Strategic Uncertainty: An Experiment on Markets and Contracts," American Economic Review, American Economic Association, vol. 100(5), pages 2261-78, December.
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  8. Schlag, Karl H., 1998. "Why Imitate, and If So, How?, : A Boundedly Rational Approach to Multi-armed Bandits," Journal of Economic Theory, Elsevier, vol. 78(1), pages 130-156, January.
  9. Roberto A. Weber, 2006. "Managing Growth to Achieve Efficient Coordination in Large Groups," American Economic Review, American Economic Association, vol. 96(1), pages 114-126, March.
  10. Robles, Jack, 1997. "Evolution and Long Run Equilibria in Coordination Games with Summary Statistic Payoff Technologies," Journal of Economic Theory, Elsevier, vol. 75(1), pages 180-193, July.
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  12. Blume Lawrence E., 1993. "The Statistical Mechanics of Strategic Interaction," Games and Economic Behavior, Elsevier, vol. 5(3), pages 387-424, July.
  13. Janssen, Maarten C. W. & Mendys-Kamphorst, Ewa, 2004. "The price of a price: on the crowding out and in of social norms," Journal of Economic Behavior & Organization, Elsevier, vol. 55(3), pages 377-395, November.
  14. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
  15. 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.
  16. Ahmed Anwar, 2004. "On the Co-Existence of Conventions," ESE Discussion Papers 68, Edinburgh School of Economics, University of Edinburgh.
  17. Jordi Brandts & David J. Cooper, 2004. "A Change Would Do You Good . . . An Experimental Study on How to Overcome Coordination Failure in Organizations," UFAE and IAE Working Papers 606.04, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  18. Fernando Vega Redondo, 1996. "The evolution of walrasian behavior," Working Papers. Serie AD 1996-05, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
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Cited by:
  1. Simon Weidenholzer, 2010. "Coordination Games and Local Interactions: A Survey of the Game Theoretic Literature," Games, MDPI, Open Access Journal, vol. 1(4), pages 551-585, November.

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