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Competition as a Coordination Device. Experimental Evidence from a Minimum Effort Coordination Game

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Author Info
Thomas Riechmann (University of Magedeburg)
Joachim Weimann (University of Magdeburg)

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Abstract

The 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 that foster efficient coordination of individual economic plans. In this paper, we introduce such a rather classical 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 mechanism of (inter-group) competition.

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Paper provided by EconWPA in its series Game Theory and Information with number 0405011.

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Length: 25 pages
Date of creation: 26 May 2004
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Handle: RePEc:wpa:wuwpga:0405011

Note: Type of Document - pdf; pages: 25
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Web page: http://129.3.20.41

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Keywords: coordination failure team production competition

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Find related papers by 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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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Straub, Paul G., 1995. "Risk dominance and coordination failures in static games," The Quarterly Review of Economics and Finance, Elsevier, vol. 35(4), pages 339-363. [Downloadable!] (restricted)
  2. 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. [Downloadable!] (restricted)
  3. Cooper, Russell, et al, 1992. "Communication in Coordination Games," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 739-71, May. [Downloadable!] (restricted)
  4. Cooper, R. & Dejong, D.V. & Forsythe, R. & Ross, T.W., 1989. "Communication In Coordination Games," Carleton Industrial Organization Research Unit (CIORU) 89-07, Carleton University, Department of Economics.
  5. Williamson, Oliver E, 1993. "Contested Exchange versus the Governance of Contractual Relations," Journal of Economic Perspectives, American Economic Association, vol. 7(1), pages 103-08, Winter. [Downloadable!] (restricted)
  6. Nalbantian, Haig R & Schotter, Andrew, 1997. "Productivity under Group Incentives: An Experimental Study," American Economic Review, American Economic Association, vol. 87(3), pages 314-41, June. [Downloadable!] (restricted)
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  7. Christiane Clemens & Thomas Riechmann, 2003. "Relative Payoffs and Evolutionary Spite --- Evolutionary Equilibria in Games with Finitely Many Players," Computing in Economics and Finance 2003 98, Society for Computational Economics.
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  8. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January. [Downloadable!] (restricted)
  9. Cooper, Russell & John, Andrew, 1988. "Coordinating Coordination Failures in Keynesian Models," The Quarterly Journal of Economics, MIT Press, vol. 103(3), pages 441-63, August. [Downloadable!] (restricted)
  10. Stiglitz, Joseph E, 1993. "Post Walrasian and Post Marxian Economics," Journal of Economic Perspectives, American Economic Association, vol. 7(1), pages 109-14, Winter. [Downloadable!] (restricted)
  11. Bowles, Samuel & Gintis, Herbert, 1993. "The Revenge of Homo Economicus: Contested Exchange and the Revival of Political Economy," Journal of Economic Perspectives, American Economic Association, vol. 7(1), pages 83-102, Winter. [Downloadable!] (restricted)
  12. Cooper, Russell, 1994. "Equilibrium Selection in Imperfectly Competitive Economies with Multiple Equilibria," Economic Journal, Royal Economic Society, vol. 104(426), pages 1106-22, September. [Downloadable!] (restricted)
  13. Berninghaus, Siegfried K. & Ehrhart, Karl-Martin, 1998. "Time horizon and equilibrium selection in tacit coordination games: Experimental results," Journal of Economic Behavior & Organization, Elsevier, vol. 37(2), pages 231-248, October. [Downloadable!] (restricted)
  14. Goeree, Jacob K. & Holt, Charles A., 2005. "An experimental study of costly coordination," Games and Economic Behavior, Elsevier, vol. 51(2), pages 349-364, May. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Thomas Chesney & Swee-Hoon Chuah & Robert Hoffmann, 2007. "Virtual world experimentation: An exploratory study," Discussion Papers 2007-14, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham. [Downloadable!]
  2. Thomas Chesney & Swee-Hoon Chuah & Robert Hoffmann, 2007. "Virtual world experimentation: An exploratory study," Occasional Papers 21, Industrial Economics Division. [Downloadable!]
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