Time horizon and equilibrium selection in tacit coordination games: Experimental results

Berninghaus, Siegfried K.; Ehrhart, Karl‐Martin

doi:10.1016/s0167-2681(98)00086-9

Cited by 96 publications

(77 citation statements)

References 5 publications

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“…Several other experimenters -in baseline treatments for various modifications reported in those papers --replicated this unraveling result with the same payoff matrix, and with subject numbers varying from 6 -14 (e.g., Cachon and Camerer, 1996;Bornstein, Gneezy and Nagel, 2002;Blume and Ortmann, 2005;Chaudhuri, Schotter and Sopher, 2005). Other experimenters -also in baseline treatments for various modifications reported in those papers --chose structurally similar payoff matrices (e.g., linear deviation costs, no negative payoffs) with slightly more or less action choices (e.g., Berninghaus and Ehrhart, 1998;Knez and Camerer, 1994;Weber, Camerer, Rottenstreich and Knez, 2001;Brandts and Cooper, 2004, 2005a and also replicated this result.…”

Section: Laboratory Evidence Of Coordination Failures and Successesmentioning

confidence: 56%

“…-Lower costs of experimentation such as increasing the number of rounds while keeping the overall earnings roughly the same, or refining the actions space, or some combination thereof, are efficiency-enhancing (e.g., Berninghaus and Ehrhart, 1998;Van Huyck et al, 2001). -Lower costs of exerting effort is efficiency-enhancing (e.g., Goeree and Holt, 2005).…”

Section: Discussionmentioning

confidence: 99%

“…Keeping the action space roughly comparable to that in the classic VHBB (1990) study, Berninghaus and Ehrhart (1998) introduced longer time horizons (scaling down the per-round payoffs accordingly), so as to lower the opportunity cost of exploration. They showed that number of rounds had the hypothesized effect although they did not bring about complete convergence to the Pareto-efficient outcome, and although they did not make a difference in the distribution of initial choices, as one might expect.…”

Section: Laboratory Evidence Of Coordination Failures and Successesmentioning

confidence: 99%

“…The authors carefully analyze initial, adaptive, and terminal behavior. Among the many interesting resultscontradicting the Berninghaus and Ehrhart (1998) results about the initial values -is the finding that "some of the behavior predicted to emerge in the session has already been incorporated into initial behavior" (p. 9). Specifically, the variation in order statistic and group size influenced behavior in the first round, with subjects reacting more strongly to differences in the order statistic than in group size (see Table 2, p. 8).…”

Section: Coordination Requirement: Order Statistic and Group Sizementioning

confidence: 99%

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When and why? A critical survey on coordination failure in the laboratory

2007

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Coordination games with Pareto-ranked equilibria have attracted major theoretical attention over the past two decades. Two early path-breaking sets of experimental studies were widely interpreted as suggesting that coordination failure is a common phenomenon in the laboratory. We identify the major determinants that seem to affect the incidence, and/or emergence, of coordination failure in the lab and review critically the existing experimental studies on coordination games with Pareto-ranked equilibria since that early evidence emerged. We conclude that coordination failure is likely to be the exception rather than the rule, both in the lab and outside of it.

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Section: Laboratory Evidence Of Coordination Failures and Successesmentioning

confidence: 56%

Section: Discussionmentioning

confidence: 99%

Section: Laboratory Evidence Of Coordination Failures and Successesmentioning

confidence: 99%

Section: Coordination Requirement: Order Statistic and Group Sizementioning

confidence: 99%

See 2 more Smart Citations

When and why? A critical survey on coordination failure in the laboratory

2007

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“…In a direct comparison of the efficacy of communication and (linear) incentives, Brandts and Cooper (2005) find that communication is more effective. Other studies have attempted to improve coordination by introducing incentives for outperforming other groups (Bornstein et al 2002), changing the cost associated with more efficient actions (Goeree and Holt 2005), and varying the time horizon of the repeated game (Berninghaus and Ehrhart 1998). Finally, Weber (2006) shows that a firm's growth rate can be critical for maintaining coordination.…”

Section: Experimental Designmentioning

confidence: 99%

Solving coordination failure with “all-or-none” group-level incentives

2007

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Coordinating activity among members is an important problem faced by organizations. When firms, or units within firms, are stuck in bad equilibria, managers may turn to the temporary use of simple incentives-flat punishments or rewards-in an attempt to transition the firm or unit to a more efficient equilibrium. We investigate the use of incentives in the context of the "minimum-effort," or "weak-link," coordination game. We allow groups to reach the inefficient equilibrium and then implement temporary, flat, "all-or-none" incentives to encourage coordination on more efficient equilibria. We vary whether incentives are positive (rewards) or negative (penalties), whether they have substantial or nominal monetary value, and whether they are targeted to a specific outcome (the efficient equilibrium) or untargeted (apply to more than one outcome). Overall, incentives of all kinds are effective at improving coordination while they are in place, but there is little long-term persistent benefit of incentives-once incentives are removed, groups tend to return to the inefficient outcome. We find some differences between different kinds of incentives. Finally, we contrast our results to other recent work demonstrating greater long-term effectiveness of temporary incentives.

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