Communication and efficiency in competitive coordination games

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. JEL Classifications: C70, D72, H41

Competition strength influences individual preferences in an auction game

“…The bid dynamics we find, replicate findings from previous studies; players reduced their bids over the course of auctions (Gneezy & Smorodinsky, 2006; Sheremeta & Zhang, 2010), adjust their bids in the direction of competitor (Cason, Sheremeta, & Zhang, 2012), and increase their bids when losing and decrease their bids when winning (Kuhnen & Tymula, 2011). Over and beyond bid dynamics, our findings extend theories of decision driven preference change (Jarcho, Berkman, & Lieberman, 2011; Sharot, Martino, & Dolan, 2009) by showing that changes in preference are evoked by interactions between competitors.…”

You Can’t Put Old Wine in New Bottles: The Effect of Newcomers on Coordination in Groups

“…Our conceptualization of coordination is in line with economics and social psychology research which suggest that groups can coordinate to achieve a variety of performance outcomes, ranging from completely efficient coordination to completely inefficient coordination [15], [24], [25], [26]. For instance, there are many settings – ranging from teams to entire economies – where individuals trying to coordinate may be “trapped” in an equilibrium that is inferior to other equilibria, and thus their coordination is somewhat inefficient [15], [25], [27]. Work teams, for example, can “satisfice” and settle for routines that produce suboptimal outcomes but nevertheless create (some) value for an organization [28].…”

“…Dineen and Noe [13] similarly posit that emergent states, or “properties of the [group] that are typically dynamic in nature and vary as a function of team context, inputs, processes, and outcomes” [14] are likely to explain the effects of member change on group performance (p. 357). Two emergent states posited and found to shape group performance are task flexibility and group learning [13], [15], [16]. For example, team learning and task flexibility suffer from member change (operationalized as team turnover), and, in turn, lead to reduced team functioning on self managing manufacturing teams [16].…”

“…However, work teams can also “maximize” and create routines that produce optimal outcomes, thus leading to more efficient coordination, or totally fail, leading to completely inefficient coordination. Thus, following the work of experimental economics and social psychology, we view coordination as a performance outcome of groups that ranges from completely efficient coordination to completely inefficient coordination [15], [20], [25], [26].…”

Predictable and Predictive Emotions: Explaining Cheap Signals and Trust Re-Extension

“…Emotions are important components of message composition, speech production and perception, and face-to-face communication. Personal communication in various forms is known to improve cooperation (Orbell et al, 1988;Bohnet and Frey, 1999;Ridings et al, 2002;Zheng et al, 2002;Buchan et al, 2006;Cason et al, 2012) by facilitating coordination, decreasing social distance, raising solidarity, and providing the cues of familiarity that are normally associated with trustworthy relationships. Smith (1759) wrote of the "fellow feeling" that can be generated, for example as a consequence of sharing in another's emotional state, and being part of the process of improving it.…”