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Classic coordination failures revisited: the effects of deviation costs and loss avoidance

Author

Listed:
  • Giovanna Devetag

    (Department of Law and Management, University of Perugia)

  • Andreas Ortmann

    (Economics Department, Australian School of Business, University of New South Wales)

Abstract

Are communication failures common? We revisit a classic example of experimental coordination failure and explore, in a 2x2 design, the effects of deviation costs and loss avoidance. Our results provide additional insights into the parametric determinants of laboratory coordination failures, and successes.

Suggested Citation

  • Giovanna Devetag & Andreas Ortmann, 2010. "Classic coordination failures revisited: the effects of deviation costs and loss avoidance," Economics Bulletin, AccessEcon, vol. 30(2), pages 1633-1641.
    • Handle: RePEc:ebl:ecbull:eb-10-00262
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    References listed on IDEAS

    as
    1. Giovanna Devetag & Andreas Ortmann, 2007. "When and why? A critical survey on coordination failure in the laboratory," Experimental Economics, Springer;Economic Science Association, vol. 10(3), pages 331-344, September.
    2. Rydval, Ondrej & Ortmann, Andreas, 2005. "Loss avoidance as selection principle: Evidence from simple stag-hunt games," Economics Letters, Elsevier, vol. 88(1), pages 101-107, July.
    3. Cooper, Russell, et al, 1990. "Selection Criteria in Coordination Games: Some Experimental Results," American Economic Review, American Economic Association, vol. 80(1), pages 218-233, March.
    4. 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.
    5. Gérard P. Cachon & Colin F. Camerer, 1996. "Loss-Avoidance and Forward Induction in Experimental Coordination Games," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 111(1), pages 165-194.
    6. John B. Van Huyck & Raymond C. Battalio & Richard O. Beil, 1991. "Strategic Uncertainty, Equilibrium Selection, and Coordination Failure in Average Opinion Games," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(3), pages 885-910.
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    Citations

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    Cited by:

    1. Nobuyuki Hanaki & Nicolas Jacquemet & Stéphane Luchini & Adam Zylbersztejn, 2016. "Cognitive ability and the effect of strategic uncertainty," Theory and Decision, Springer, vol. 81(1), pages 101-121, June.
    2. Stefania Bortolotti & Giovanna Devetag & Andreas Ortmann, 2009. "Exploring the effects of real effort in a weak-link experiment," CEEL Working Papers 0901, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
    3. Bortolotti, Stefania & Devetag, Giovanna & Ortmann, Andreas, 2016. "Group incentives or individual incentives? A real-effort weak-link experiment," Journal of Economic Psychology, Elsevier, vol. 56(C), pages 60-73.

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    More about this item

    Keywords

    coordination games; Pareto-ranked equilibria; payoff-asymmetric equilibria; optimization incentives; robustness; coordination failure;
    All these keywords.

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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