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Dynamic Coordination via Organizational Routines

  • Heidhues, Paul
  • Blume, Andreas
  • Franco, April

We investigate dynamic coordination among members of a problem-solving team who receive private signals about which of their actions are required for a (static) coordinated solution and who have repeated opportunities to explore different action combinations. In this environment ordinal equilibria, in which agents condition only on how their signals rank their actions and not on signal strength, lead to simple patterns of behavior that have a natural interpretation as routines. These routines partially solve the team's coordination problem by synchronizing the team's search efforts and prove to be resilient to changes in the environment by being ex post equilibria, to agents having only a coarse understanding of other agents' strategies by being fully cursed, and to natural forms of agents' overconfidence. The price of this resilience is that optimal routines are frequently suboptimal equilibria.

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Paper provided by Verein für Socialpolitik / German Economic Association in its series Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order with number 80027.

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Date of creation: 2013
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Handle: RePEc:zbw:vfsc13:80027
Contact details of provider: Web page: http://www.socialpolitik.org/
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  1. Sylvain Chassang, 2010. "Building Routines: Learning, Cooperation, and the Dynamics of Incomplete Relational Contracts," American Economic Review, American Economic Association, vol. 100(1), pages 448-65, March.
  2. Thomas Wiseman, 2005. "A Partial Folk Theorem for Games with Unknown Payoff Distributions," Econometrica, Econometric Society, vol. 73(2), pages 629-645, 03.
  3. Andreas Blume & John Duffy & April Mitchell Franco, 2008. "Decentralized Organizational Learning: An Experimental Investigation," Working Papers 382, University of Pittsburgh, Department of Economics, revised May 2009.
  4. Chamley,Christophe P., 2004. "Rational Herds," Cambridge Books, Cambridge University Press, number 9780521824019, 1.
  5. Jehiel, Philippe, 2005. "Analogy-based expectation equilibrium," Journal of Economic Theory, Elsevier, vol. 123(2), pages 81-104, August.
  6. Abhijit V. Banerjee, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, Oxford University Press, vol. 107(3), pages 797-817.
  7. GOSSNER, Olivier & VIEILLE, Nicolas, 1998. "Strategic learning in games with symmetric information," CORE Discussion Papers 1998023, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  8. Andreas Blume & Paul Heidhues, 2003. "Private Monitoring in Auctions," CIG Working Papers SP II 2003-14, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  9. Andreas Blume & April Franco, 2002. "Learning from failure," Staff Report 299, Federal Reserve Bank of Minneapolis.
  10. Robert S. Gibbons, 2010. "Inside Organizations: Pricing, Politics, and Path Dependence," Levine's Working Paper Archive 661465000000000249, David K. Levine.
  11. Jacques Cremer & Luis Garicano & Andrea Prat, 2006. "Language and the Theory of the Firm," Levine's Bibliography 784828000000000373, UCLA Department of Economics.
  12. David A. Miller, 2012. "Robust Collusion with Private Information," Review of Economic Studies, Oxford University Press, vol. 79(2), pages 778-811.
  13. Andreas Blume & John Duffy, 2004. "Organizational Learning: An Experimental Investigation," 2004 Meeting Papers 617, Society for Economic Dynamics.
  14. Blume, Andreas & Franco, April Mitchell, 2007. "Decentralized learning from failure," Journal of Economic Theory, Elsevier, vol. 133(1), pages 504-523, March.
  15. Chamley,Christophe P., 2004. "Rational Herds," Cambridge Books, Cambridge University Press, number 9780521530927, 1.
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