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Coordination and learning in dynamic global games: experimental evidence

  • Olga Shurchkov

    ()

Coordination problems are ubiquitous in social and economic life. Political mass demonstrations, the decision whether to join a speculative currency attack, investment in a risky venture, and capital flight from a particular country are all characterized by coordination problems. Furthermore, all these events have a dynamic nature which has been largely omitted from previous experimental studies. Here I use a two-stage variant of a dynamic global game to study experimentally how the arrival of information in a dynamic setting affects the relative aggressiveness of speculators. In the first stage, subjects exhibit excess aggressiveness, which appears to be driven by beliefs about others’ actions rather than an intrinsic taste for attacking. However, following a failed first-stage attack, subjects learn to be less aggressive in the second stage. On the other hand, the arrival of new, more precise information after a failed attack leads to an increase in subjects’ aggressiveness. Beliefs, again, play a crucial role in explaining how the arrival of information affects attacking behavior. Copyright Economic Science Association 2013

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File URL: http://hdl.handle.net/10.1007/s10683-012-9339-3
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Article provided by Springer in its journal Experimental Economics.

Volume (Year): 16 (2013)
Issue (Month): 3 (September)
Pages: 313-334

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Handle: RePEc:kap:expeco:v:16:y:2013:i:3:p:313-334
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