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Competition as a Coordination Device. Experimental Evidence from a Minimum Effort Coordination Game

  • Thomas Riechmann

    (University of Magedeburg)

  • Joachim Weimann

    (University of Magdeburg)

The problem of coordination failure, particularly in 'team production' situations, is central to a large number of mircroeconomic as well as macroeconomic models. As this type of inefficient coordination poses a severe economic problem, there is a need for institutions that foster efficient coordination of individual economic plans. In this paper, we introduce such a rather classical economic institution: competition. In a series of laboratory experiments, we reveal that the true reason for coordination failure is strategic uncertainty, which can be reduced almost completely by introducing a appropriately designed mechanism of (inter-group) competition.

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File URL: http://econwpa.repec.org/eps/game/papers/0405/0405011.pdf
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Paper provided by EconWPA in its series Game Theory and Information with number 0405011.

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Length: 25 pages
Date of creation: 26 May 2004
Date of revision:
Handle: RePEc:wpa:wuwpga:0405011
Note: Type of Document - pdf; pages: 25
Contact details of provider: Web page: http://econwpa.repec.org

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  1. Straub, Paul G., 1995. "Risk dominance and coordination failures in static games," The Quarterly Review of Economics and Finance, Elsevier, vol. 35(4), pages 339-363.
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  4. repec:car:ciorup:89-07 is not listed on IDEAS
  5. Jeannette Brosig & Joachim Weimann & Axel Ockenfels, 2003. "The Effect of Communication Media on Cooperation," German Economic Review, Verein für Socialpolitik, vol. 4(2), pages 217-241, 05.
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  8. Berninghaus, Siegfried K. & Ehrhart, Karl-Martin, 2001. "Coordination and information: recent experimental evidence," Economics Letters, Elsevier, vol. 73(3), pages 345-351, December.
  9. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
  10. Riechmann, Thomas & Weimann, Joachim, 2008. "Competition as a coordination device: Experimental evidence from a minimum effort coordination game," European Journal of Political Economy, Elsevier, vol. 24(2), pages 437-454, June.
  11. Todd Sandler, 1998. "Global and regional public goods: a prognosis for collective action," Fiscal Studies, Institute for Fiscal Studies, vol. 19(3), pages 221-247, August.
  12. Nalbantian, Haig & Schotter, Andrew, 1994. "Productivity Under Group Incentives: An Experimental Study," Working Papers 94-04, C.V. Starr Center for Applied Economics, New York University.
  13. Cooper, Russell, et al, 1992. "Communication in Coordination Games," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 739-71, May.
  14. M. Kandori & G. Mailath & R. Rob, 1999. "Learning, Mutation and Long Run Equilibria in Games," Levine's Working Paper Archive 500, David K. Levine.
  15. Cooper, Russell, 1994. "Equilibrium Selection in Imperfectly Competitive Economies with Multiple Equilibria," Economic Journal, Royal Economic Society, vol. 104(426), pages 1106-22, September.
  16. Berninghaus, Siegfried K. & Ehrhart, Karl-Martin, 1998. "Time horizon and equilibrium selection in tacit coordination games: Experimental results," Journal of Economic Behavior & Organization, Elsevier, vol. 37(2), pages 231-248, October.
  17. Goeree, Jacob K. & Holt, Charles A., 2005. "An experimental study of costly coordination," Games and Economic Behavior, Elsevier, vol. 51(2), pages 349-364, May.
  18. Brosig, Jeannette, 2006. "Communication channels and induced behavior," MPRA Paper 14035, University Library of Munich, Germany.
  19. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  20. Cooper, Russell & John, Andrew, 1988. "Coordinating Coordination Failures in Keynesian Models," The Quarterly Journal of Economics, MIT Press, vol. 103(3), pages 441-63, August.
  21. Battalio, Raymond & Samuelson, Larry & Van Huyck, John, 2001. "Optimization Incentives and Coordination Failure in Laboratory Stag Hunt Games," Econometrica, Econometric Society, vol. 69(3), pages 749-64, May.
  22. Christiane Clemens & Thomas Riechmann, 2003. "Relative Payoffs and Evolutionary Spite --- Evolutionary Equilibria in Games with Finitely Many Players," Computing in Economics and Finance 2003 98, Society for Computational Economics.
  23. P. Young, 1999. "The Evolution of Conventions," Levine's Working Paper Archive 485, David K. Levine.
  24. Samuel Bowles & Herbert Gintis, 1993. "The Revenge of Homo Economicus: Contested Exchange and the Revival of Political Economy," Journal of Economic Perspectives, American Economic Association, vol. 7(1), pages 83-102, Winter.
  25. Blume, Andreas & Ortmann, Andreas, 2007. "The effects of costless pre-play communication: Experimental evidence from games with Pareto-ranked equilibria," Journal of Economic Theory, Elsevier, vol. 132(1), pages 274-290, January.
  26. Van Huyck John B. & Battalio Raymond C. & Beil Richard O., 1993. "Asset Markets as an Equilibrium Selection Mechanism: Coordination Failure, Game Form Auctions, and Tacit Communication," Games and Economic Behavior, Elsevier, vol. 5(3), pages 485-504, July.
  27. Cooper,Russell, 1999. "Coordination Games," Cambridge Books, Cambridge University Press, number 9780521570176.
  28. Joseph E. Stiglitz, 1993. "Post Walrasian and Post Marxian Economics," Journal of Economic Perspectives, American Economic Association, vol. 7(1), pages 109-114, Winter.
  29. D. Foster & P. Young, 2010. "Stochastic Evolutionary Game Dynamics," Levine's Working Paper Archive 493, David K. Levine.
  30. Oliver E. Williamson, 1993. "Contested Exchange versus the Governance of Contractual Relations," Journal of Economic Perspectives, American Economic Association, vol. 7(1), pages 103-108, Winter.
  31. Cooper,Russell, 1999. "Coordination Games," Cambridge Books, Cambridge University Press, number 9780521578967.
  32. Thomas Riechmann, 2005. "Dynamic Behavior in Minimum Effort Coordination Games - Some Theory of Group Size and Inter-Group Competition as Coordination Devices," Game Theory and Information 0503010, EconWPA.
  33. Crawford, Vincent P., 1991. "An "evolutionary" interpretation of Van Huyck, Battalio, and Beil's experimental results on coordination," Games and Economic Behavior, Elsevier, vol. 3(1), pages 25-59, February.
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