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Efficient coordination in the lab

Author

Listed:
  • Aurora García-Gallego

    () (Universitat Jaume I)

  • Penélope Hernández-Rojas

    (University of Valencia)

  • Amalia Rodrigo-González

    (University of Valencia)

Abstract

Abstract We follow the example of Gossner et al. (Econometrica 74(6):1603–1636, 2006) in the design of a finitely repeated 2-player coordination game with asymmetric information. Player 1 and Player 2 and Nature simultaneously decide whether to play 0 or 1 and successful coordination requires that all actions coincide. Nature’s moves are known only by Player 1, while Player 2 observes only the history of Nature and Player 1. In such a theoretical set up, efficient transmission of information takes place when Player 1 uses block codification through signalling mistakes. With this in mind, we test coordination in the lab. We first model and establish the appropriate sequence length played by Nature and the block strategy for lab implementability. We show that the majority rule with 3-length is the optimal block codification for a 55-length sequence. Experimental data supports the main results of the original model with respect to the codification rule using signalling mistakes.

Suggested Citation

  • Aurora García-Gallego & Penélope Hernández-Rojas & Amalia Rodrigo-González, 2019. "Efficient coordination in the lab," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 14(1), pages 175-201, March.
  • Handle: RePEc:spr:jeicoo:v:14:y:2019:i:1:d:10.1007_s11403-017-0214-3
    DOI: 10.1007/s11403-017-0214-3
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    References listed on IDEAS

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    More about this item

    Keywords

    Coordination game; Experiment; Cheap-talk;

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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