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Compromise and Coordination: An Experimental Study

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  • He, Simin
  • Wu, Jiabin

Abstract

This paper experimentally studies the role of a compromise option in a repeated battle-of-the-sexes game. We find that in a random-matching environment, compromise serves as an effective focal point and facilitates coordination, but fails to improve efficiency. However, in a fixed-partnership environment, compromise deters subjects from learning to play alternation, a more efficient but also more complex strategy. As a result, compromise hurts efficiency in the long-run by allowing subjects to coordinate on the less efficient outcome. We explore various behavioral mechanisms and suggest that people may fail to use an equal and efficient strategy if such a strategy is complex.

Suggested Citation

  • He, Simin & Wu, Jiabin, 2018. "Compromise and Coordination: An Experimental Study," MPRA Paper 84713, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:84713
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    3. Francesco Fallucchi & Daniele Nosenzo, 2020. "The Coordinating Power of Social Norms," Discussion Papers 2020-14, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.

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    More about this item

    Keywords

    Compromise; Battle-of-the-Sexes; Repeated games; Behavioral game theory; Experimental economics.;
    All these keywords.

    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

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