Compromise and coordination: An experimental study

This study experimentally examines the role of a compromise option in a repeated battle-of-the-sexes game. In a random matching environment, we find that compromise serves as an effective focal point and facilitates coordination, but fails to improve efficiency. However, in a fixed-partnership environment, compromise deters subjects from learning to play alternation, which is a more efficient, but arguably more complex strategy. As a result, compromise hurts efficiency by allowing subjects to coordinate on the less efficient outcome. In a follow-up experiment, we find that many compromisers switch to alternation after playing the repeated game multiple times. These results suggest that subjects teach and learn to use the alternation strategy from each other.