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Identifying the Reasons for Coordination Failure in a Laboratory Experiment

Listed author(s):
  • Philipp Külpmann
  • Davit Khantadze

In this paper, we use a laboratory experiment to investigate the effect of absence of common knowledge on the outcomes of coordination games. We introduce cognitive types into a pure coordination game in which there is no common knowledge about the distribution of cognitive types. In our experiment, around 76% of the subjects managed to coordinate on the payoff-dominant equilibrium despite the absence of common knowledge. However, around 9% of the players had first-order beliefs that lead to coordination failure and another 9% exhibited coordination failure due to higher-order beliefs. Furthermore, we compare our results with predictions of different models of higher-order beliefs, commonly used in the literature.

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File URL: https://ideas.repec.org/jmp/2016/pkl168.pdf
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Paper provided by Job Market Papers in its series 2016 Papers with number pkl168.

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Date of creation: 21 Nov 2016
Handle: RePEc:jmp:jm2016:pkl168
Contact details of provider: Web page: https://ideas.repec.org/jmp.html

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