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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)

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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File URL: http://128.118.178.162/eps/game/papers/0405/0405011.pdf
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Bibliographic Info

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
Date of revision:
Handle: RePEc:wpa:wuwpga:0405011

Note: Type of Document - pdf; pages: 25
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Web page: http://128.118.178.162

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Keywords: coordination failure; team production; competition;

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References

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Citations

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Cited by:
  1. Heinrich Ursprung, 2011. "The Evolution of Sharing Rules in Rent Seeking Contests: Incentives Crowd Out Cooperation," Working Paper Series of the Department of Economics, University of Konstanz 2011-02, Department of Economics, University of Konstanz.
  2. 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.
  3. Ernesto Reuben & Jean-Robert Tyran, 2008. "Everyone Is A Winner: Promoting Cooperation Through Non-Rival Intergroup Competition," Discussion Papers 08-26, University of Copenhagen. Department of Economics.
  4. Maoliang Ye & Sam Asher & Lorenzo Casaburi & Plamen Nikolov, 2010. "One step at a time: Does gradualism build coordination?," Framed Field Experiments 00188, The Field Experiments Website.
  5. Gerald Eisenkopf, 2013. "The Impact of Management Incentives in Intergroup Contests," TWI Research Paper Series 87, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
  6. Cason, Timothy N. & Sheremeta, Roman M. & Zhang, Jingjing, 2012. "Communication and efficiency in competitive coordination games," Games and Economic Behavior, Elsevier, vol. 76(1), pages 26-43.
  7. Dirk Engelmann & Hans-Theo Normann, 2010. "Maximum effort in the minimum-effort game," Experimental Economics, Springer, vol. 13(3), pages 249-259, September.
  8. Eisenkopf, Gerald, 2013. "Management Impact in an Experimental Intergroup Contest," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79863, Verein für Socialpolitik / German Economic Association.
  9. Thomas Riechmann & Joachim Weimann, 2004. "Competition as a Coordination Device. Experimental Evidence from a Minimum Effort Coordination Game," Game Theory and Information 0405011, EconWPA.
  10. K.J.M. De Jaegher & B. Hoyer, 2012. "Cooperation and the common enemy effect," Working Papers 12-24, Utrecht School of Economics.
  11. Gerald Eisenkopf, 2013. "The Impact of Management Incentives in Intergroup Contests," Working Paper Series of the Department of Economics, University of Konstanz 2013-26, Department of Economics, University of Konstanz.

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