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Communication and efficiency in competitive coordination games


Cason, Timothy N; Sheremeta, Roman M; Zhang, Jingjing (2012). Communication and efficiency in competitive coordination games. Working paper series / Institute for Empirical Research in Economics 505, University of Zurich.

Abstract

Costless pre-play communication has been found to effectively facilitate coordination and enhance efficiency in games with Pareto-ranked equilibria. We report an experiment in which two groups compete in a weakest-link contest by expending costly efforts. Allowing intra-group communication leads to more aggressive competition and greater coordination than control treatments without any communication. On the other hand, allowing inter-group communication leads to less destructive competition. As a result, intra-group communication decreases while inter-group communication increases payoffs. Our experiment thus provides an example of an environment where communication can either enhance or damage efficiency. This contrasts sharply with experimental findings from public goods and other coordination games, where communication always enhances efficiency and often leads to socially optimal outcomes.

Abstract

Costless pre-play communication has been found to effectively facilitate coordination and enhance efficiency in games with Pareto-ranked equilibria. We report an experiment in which two groups compete in a weakest-link contest by expending costly efforts. Allowing intra-group communication leads to more aggressive competition and greater coordination than control treatments without any communication. On the other hand, allowing inter-group communication leads to less destructive competition. As a result, intra-group communication decreases while inter-group communication increases payoffs. Our experiment thus provides an example of an environment where communication can either enhance or damage efficiency. This contrasts sharply with experimental findings from public goods and other coordination games, where communication always enhances efficiency and often leads to socially optimal outcomes.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Institute for Empirical Research in Economics (former)
Dewey Decimal Classification:330 Economics
JEL Classification:C70, D72, H41
Uncontrolled Keywords:Contest, between-group competition, within-group competition, cooperation, coordination, free-riding, experiments
Language:English
Date:February 2012
Deposited On:29 Nov 2011 15:09
Last Modified:12 Aug 2017 12:41
Series Name:Working paper series / Institute for Empirical Research in Economics
Number of Pages:42
ISSN:1424-0459
Additional Information:Revised version
Official URL:http://www.iew.unizh.ch/wp/iewwp505.pdf
Related URLs:http://www.econ.uzh.ch/wp.html

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