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Promoting coordination in summary-statistic games

  • Dominik Erharter


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    This paper studies how external incentives can help agents to coordinate in summary-statistic games. Agents follow a myopic best-reply rule and face a trade-off between efficiency and strategic uncertainty. A principal can help agents to coordinate on the Pareto optimal equilibrium by monitoring an appropriate number of agents. The optimal monitoring policy is 'minimally-invasive' - for every strategy profile of the agents, the principal either monitors just enough agents to make high effort a best-reply or does not monitor at all. Furthermore, given the principal's payoffs are supermodular and increasing at an increasing rate, the optimal monitoring policy is monotone in the number of agents who choose high effort.

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    Paper provided by Faculty of Economics and Statistics, University of Innsbruck in its series Working Papers with number 2013-28.

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    Length: 43 pages
    Date of creation: Oct 2013
    Date of revision:
    Handle: RePEc:inn:wpaper:2013-28
    Contact details of provider: Postal: Universitätsstraße 15, A - 6020 Innsbruck
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    1. Devetag, Giovanna, 2005. "Precedent transfer in coordination games: An experiment," Economics Letters, Elsevier, vol. 89(2), pages 227-232, November.
    2. J Bergin & B L Lipman, 1997. "Evolution with state-dependent Mutations," Levine's Working Paper Archive 771, David K. Levine.
    3. 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.
    4. repec:tpr:qjecon:v:106:y:1991:i:3:p:885-910 is not listed on IDEAS
    5. Martin K. Jensen, 2006. "Aggregative Games," Discussion Papers 06-10, Department of Economics, University of Birmingham.
    6. Kim, Youngse, 1996. "Equilibrium Selection inn-Person Coordination Games," Games and Economic Behavior, Elsevier, vol. 15(2), pages 203-227, August.
    7. Kandori, Michihiro & Mailath, George J & Rob, Rafael, 1993. "Learning, Mutation, and Long Run Equilibria in Games," Econometrica, Econometric Society, vol. 61(1), pages 29-56, January.
    8. Giovanna Devetag & Andreas Ortmann, 2006. "When and Why? A Critical Survey on Coordination Failure in the Laboratory," CEEL Working Papers 0605, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
    9. Martin Jensen, 2010. "Aggregative games and best-reply potentials," Economic Theory, Springer, vol. 43(1), pages 45-66, April.
    10. Robles, Jack, 1997. "Evolution and Long Run Equilibria in Coordination Games with Summary Statistic Payoff Technologies," Journal of Economic Theory, Elsevier, vol. 75(1), pages 180-193, July.
    11. V. Crawford, 2010. "Adaptive Dynamics in Coordination Games," Levine's Working Paper Archive 404, David K. Levine.
    12. Van Huyck, John B & Battalio, Raymond C & Beil, Richard O, 1990. "Tacit Coordination Games, Strategic Uncertainty, and Coordination Failure," American Economic Review, American Economic Association, vol. 80(1), pages 234-48, March.
    13. repec:tpr:qjecon:v:98:y:1983:i:3:p:525-28 is not listed on IDEAS
    14. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
    15. Ellison, Glenn, 2000. "Basins of Attraction, Long-Run Stochastic Stability, and the Speed of Step-by-Step Evolution," Review of Economic Studies, Wiley Blackwell, vol. 67(1), pages 17-45, January.
    16. Carlos Alós-Ferrer & Ana Ania, 2005. "The evolutionary stability of perfectly competitive behavior," Economic Theory, Springer, vol. 26(3), pages 497-516, October.
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