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Identifying the Reasons for Coordination Failure in a Laboratory Experiment

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  • Philipp Külpmann
  • Davit Khantadze

Abstract

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.

Suggested Citation

  • Philipp Külpmann & Davit Khantadze, 2016. "Identifying the Reasons for Coordination Failure in a Laboratory Experiment," 2016 Papers pkl168, Job Market Papers.
  • Handle: RePEc:jmp:jm2016:pkl168
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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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