The Effect of Hysteresis on Equilibrium Selection in Coordination Games
One of the fundamental problems in both economics and organization is to understand how individuals coordinate. The widely used minimum-effort coordination game has been used as a simplifed model to better understand this problem. This paper first presents some theoretical results that give conditions under which the minimum-effort coordination game exhibits hysteresis. Using these theoretical results, some experimental hypotheses are developed and then confirmed using human subjects in the laboratory. The main insight is that play in a given game is heavily dependent on the history of parameters leading up to that game. For example, the experiments show when cost c = 0:5 in the minimum-effort coordination game, there is signifcantly more high effort if the cost has increased to c = 0:5 compared to when the cost has decreased to c = 0:5. One implication of this is that a temporary change in parameters may be able move the economic system from a bad equilibrium to a good equilibrium.
|Date of creation:||Sep 2011|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.krannert.purdue.edu/programs/phd
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Nyberg, Sten, 1997.
"The honest society: Stability and policy considerations,"
Journal of Public Economics,
Elsevier, vol. 64(1), pages 83-99, April.
- Nyberg, Sten, 1992. "The Honest Society: Stability and Policy Considerations," Working Paper Series 341, Research Institute of Industrial Economics.
- Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
- Jordi Brandts & David J. Cooper, 2006.
"A Change Would Do You Good .... An Experimental Study on How to Overcome Coordination Failure in Organizations,"
American Economic Review,
American Economic Association, vol. 96(3), pages 669-693, June.
- Jordi Brandts & David J. Cooper, 2004. "A Change Would Do You Good... An Experimental Study on How to Overcome Coordination Failure in Organizations," Working Papers 115, Barcelona Graduate School of Economics.
- Jordi Brandts & David J. Cooper, 2004. "A Change Would Do You Good . . . An Experimental Study on How to Overcome Coordination Failure in Organizations," UFAE and IAE Working Papers 606.04, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- 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.
- Cason, Timothy N. & Savikhin, Anya C. & Sheremeta, Roman M., 2012.
"Behavioral spillovers in coordination games,"
European Economic Review,
Elsevier, vol. 56(2), pages 233-245.
- Timothy N. Cason & Anya C. Savikhin & Roman Sheremeta, 2011. "Behavioral Spillovers in Coordination Games," Working Papers 11-20, Chapman University, Economic Science Institute.
- Cason, Timothy & Savikhin, Anya & Sheremeta, Roman, 2011. "Behavioral Spillovers in Coordination Games," MPRA Paper 52106, University Library of Munich, Germany.
When requesting a correction, please mention this item's handle: RePEc:pur:prukra:1265. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Krannert PHD)
If references are entirely missing, you can add them using this form.