Behavioral strategies in repeated pure coordination games (original) (raw)
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Coordination Failure in Capacity-Then-Price-Setting Games
SSRN Electronic Journal, 2019
In capacity-then-price-setting games, soft capacity constraints are planned sales amounts where producing above capacity is possible but more costly. While the subgame perfect equilibrium predicts equal prices, experimental evidence often reveals price discrepancies. This failure to coordinate on equal prices can imply losses, especially when serving demand is obligatory. We compare coordination failure with efficient rationing as well as with compulsory serving of demand, and additionally allow for simultaneous and sequential capacity choices. These treatments lead to a varying severity of the threat of losses. Our experimental results show that (possible) coordination failure affects behavior through two channels: via anticipating as well as via reacting to a loss. While capacities increase in anticipation of losses, prices increase when anticipating losses but decrease after experiencing losses. Coordination failures are more probable after subjects experienced a loss.
Precise Signals and Multiple Equilibria in Coordination Games: an Illustration
2003
Abstract: There is a growing literature using the global game approach to study coordination games. Several papers show a unique equilibrium as long as signals are not too noisy. In this paper, we provide an example in the context of currency attack in which multiple equilibria exist no matter how small the noises are.
Asynchronous Choice in Repeated Coordination Games
RePEc: Research Papers in Economics, 1997
The standard model of repeated games assumes perfect synchronization in the timing of decisions between the players. In many natural settings, however, choices are made asynchronously so that only one player can move at any given time. This paper studies a family of repeated settings in which choices are asynchronous. Initially, we examine, as a canonical model, a simple two person alternating move game of pure coordination. There, it is shown that for su±ciently patient players, there is a unique perfect equilibrium payo® which Pareto dominates all other payo®s. The result generalizes to any¯nite number of players and any game in a class of asynchonrously repeated games which includes both stochastic and deterministic repetition. The results complement a recent Folk Theorem by Dutta (1995) for stochastic games which can be applied to asynchronously repeated games if a full dimensionality condition holds. A critical feature of the model is the inertia in decisions. We show how the inertia in asynchronous decisions determines the set of equilibrium payo®s.
Dynamic Coordination Games with Activation Costs
Dynamic Games and Applications
Motivated by inventory control problems with set-up costs, we consider a coordination game where each player’s dynamics is an inventory model characterized by a controlled input and an uncontrolled output. An activation cost is shared among active players, namely players who control their dynamics at a given time. At each time, each player decides to be active or not depending on its inventory level. The main contribution of this paper is to show that strategies at a Nash equilibrium have a threshold structure on the number of active players. Furthermore, we provide an explicit expression for the lower and upper threshold is given both in the deterministic case, namely when the exogenous signal is known, and in the single-stage game. The relevance of the above results is discussed in the context of inventory control where Nash equilibrium reordering strategies imply that a single retailer reorders only if jointly with a number of other retailers and will reorder to restore a pre-ass...
Fictitious play in coordination games
International Journal of Game Theory, 1999
We study the Fictitious Play process with bounded and unbounded recall in pure coordination games for which failing to coordinate yields a payoff of zero for both players. It is shown that every Fictitious Play player with bounded recall may fail to coordinate against his own type. On the other hand, players with unbounded recall are shown to coordinate (almost surely) against their own type as well as against players with bounded recall. This implies that a FP player's realized average utility is (almost surely) at least as large as his minmax payoff in 2x2 coordination games.
Behavioral spillovers in coordination games
European Economic Review, 2012
Motivated by problems of coordination failure observed in weak-link games, we experimentally investigate behavioral spillovers for minimum-and median-effort coordination games. Subjects play these coordination games simultaneously and sequentially. The results show that successful coordination on the Pareto optimal equilibrium in the median game influences behavior in the minimum game when the games are played sequentially. Moreover, this positive, Pareto-improving spillover is present even when group composition changes across games, although the effect is not as strong. We also find that the precedent for uncooperative behavior in the minimum game does not influence play in the median game. These findings suggest guidelines for increasing cooperative behavior within organizations.
This article is devoted to explaining why decision makers choose salient equilibria or focal points in pure coordination games -games in which players have identical preferences over the set of possible outcomes. Focal points, even when they arise as framing effects based on the labelling of options, are intuitively obvious choices, and experimental evidence shows that decision makers often coordinate successfully by choosing them. In response to arguments that focusing is not rationally justified, a psychological explanation and a conditional justification is offered in terms of a form of reasoning called the Stackelberg heuristic that has been used to explain the selection of payoff-dominant (Pareto-optimal) equilibria in common-interest games. Pure coordination games, if appropriately modelled, are shown to be reducible to common-interest games with payoffdominant equilibria, and it is argued that focusing can therefore be explained by the Stackelberg heuristic.
We consider a game where one player, the Announcer, has to communicate the value of payo¤ relevant state of the world to a set of other players who play a coordination game with multiple equilibria. While everyone, the Announcer and the players, agree that coordination is desirable, the payo¤s of the players at the various equilibria are unequal, and thus players disagree as to which equilibrium they should coordinate on. What we argue and demonstrate experimentally is that in such coordination games it may be advantageous for a utilitarian benevolent Announcer to communicate in a coarse manner. This is true because such coarse communication may be able to mask existing payo¤ asymmetry and thereby facilitate coordination if people …nd it hard to coordinate in games with asymmetric equilibrium payo¤s.
Coordination and the Provision of Discrete Public Goods by Correlated Equilibria
Journal of Public Economic Theory, 2001
The strategic analysis of the private provision of a discrete public good has shown the existence of multiple Nash equilibria with the efficient number of players voluntarily contributing. However the coordination issue is left unexplained by this literature. The experimental evidence shows that communication among players is helpful in achieving cooperation. We claim that, from the theoretical point of view, this is equivalent to playing correlated equilibria in an extended public good game with communication, modeled as Chicken. We characterize such equilibria as feasible coordination mechanisms to achieve public goods provision in the general contribution game. We further introduce a second kind of game characterized by payoff externalities that may persist after the minimal threshold of contributors is achieved. While it is easy to show the existence of Pareto efficient correlated equilibria in the first game, in the second one players face incentive problems such that a first best cannot always be an equilibrium. Nevertheless there exist correlated equilibria that can qualify as incentive efficient mechanisms, once free riding is seen as a moral hazard issue. Finally, with an example, we discuss the impact of coalition formation in our framework.
Reducing Efficiency through Communication in Competitive Coordination Games
2009
Costless pre-play communication has been found to effectively facilitate coordination and enhance efficiency by increasing individual payoffs 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 group members to communicate before choosing efforts leads to more aggressive competition and greater coordination, but also results in substantially