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A Road to Efficiency through Communication and Commitment

Author

Listed:
  • Ala Avoyan
  • João Ramos

Abstract

We experimentally examine the efficacy of a novel pre-play institution in a well-known coordination game—the minimum-effort game—in which coordination failures are robust and persistent phenomena. This new institution allows agents to communicate while incrementally committing to their words, leading to a distinct theoretical prediction: the efficient outcome is uniquely selected in the extended coordination game. We find that commitment-enhanced communication significantly increases subjects' payoffs and achieves higher efficiency levels than various nonbinding forms of communication. We further identify the key ingredients of the institution that are central to achieving such gains.

Suggested Citation

  • Ala Avoyan & João Ramos, 2023. "A Road to Efficiency through Communication and Commitment," American Economic Review, American Economic Association, vol. 113(9), pages 2355-2381, September.
    • Handle: RePEc:aea:aecrev:v:113:y:2023:i:9:p:2355-81
    DOI: 10.1257/aer.20171014
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    References listed on IDEAS

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    1. 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.
    2. , & , & , & ,, 2014. "Asynchronicity and coordination in common and opposing interest games," Theoretical Economics, Econometric Society, vol. 9(2), May.
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    More about this item

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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