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Coordination via redistribution

Author

Listed:
  • Andrea Martinangeli

    (Max Planck Institute for Tax and Public Finance)

  • Peter Martinsson

    (University of Gothenburg)

  • Amrish Patel

    (University of East Anglia)

Abstract

Can prior voluntary redistribution improve coordination? We theoretically show that distributive preferences, forward induction and signalling all imply that it can. We then experimentally test our predictions by allowing subjects to redistribute part of their endowment before playing a battle of the sexes game. To identify whether the redistribution option increases coordination, and why, we also run experiments with no redistribution and forced redistribution. Our results show that the redis- tribution option does indeed significantly increase coordination. Disentangling the reasons why, we find that behaviour is most consistent with distributive preferences and one-step of forward induction (rather than signalling or two-steps of forward induction).

Suggested Citation

  • Andrea Martinangeli & Peter Martinsson & Amrish Patel, 2017. "Coordination via redistribution," University of East Anglia School of Economics Working Paper Series 2017-07, School of Economics, University of East Anglia, Norwich, UK..
  • Handle: RePEc:uea:ueaeco:2017_07
    as

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    References listed on IDEAS

    as
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    5. Matthew O. Jackson & Simon Wilkie, 2005. "Endogenous Games and Mechanisms: Side Payments Among Players," Review of Economic Studies, Oxford University Press, vol. 72(2), pages 543-566.
    6. Charness, Gary & Frechette, Guillaume R. & Qin, Cheng-Zhong, 2007. "Endogenous transfers in the Prisoner's Dilemma game: An experimental test of cooperation and coordination," Games and Economic Behavior, Elsevier, vol. 60(2), pages 287-306, August.
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    More about this item

    Keywords

    coordination; redistribution; experiment; distributive preferences; forward induction; signalling altruism;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact

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