Information-driven coordination: experimental results with heterogeneous individuals

Abstract

We study experimentally a coordination game with N heterogeneous individuals under different information treatments. We explore the effects of information on the emergence of Pareto-efficient outcomes, by means of a gradual decrease of the information content provided to the players in successive experiments. We observe that successful coordination is possible with private information alone, although not on a Pareto-optimal equilibrium. Reinforcement-based learning models reproduce the qualitative trends of the experimental results.

One-shot exogenous interventions increase subsequent coordination in Denmark, Spain and Ghana

“…Being given information regarding the play of a group member who picks the Pareto dominant equilibrium also increases coordination [ 30 ]. In another version of a coordination game called the dying seminar , Semeshenko et al [ 31 ] examine what happens to coordination when information is progressively decreased. They find that knowing the actual number of participants in the previous round is enough for participants to coordinate at the Pareto optimal equilibrium.…”

Solving Coordination Problems Experimentally

“…Semeshenko et al (2010) studied a similar critical-mass coordination game with heterogeneous individuals under different information treatments. They explored the effect of a gradual decrease in information on the emergence of Pareto-efficient outcomes.…”

“…and the type of cognitive process leading to its selection. Not surprisingly, individual decisions are characterized by much heterogeneity, a theme that has gained some currency also for coordination games (e.g., Sakovics & Steiner, 2012;Semeshenko et al, 2010) and is likely to be of considerable interest.…”

What kind of game is everyday interaction?

“…While a tendency to be extra careful not to offset ‘current interaction arrangements’ is one way of keeping coordination in equilibrium in the face of potential disappointments, another is to cultivate expectations that tolerate a wide variety of events and activities. 9 In both respects, tendencies of tacit coordination to sustain inefficient equilibria are compounded, increasing the probability that Pareto-dominant equilibria will be missed (Semeshenko et al, 2010; Sugden, 1989; Young, 1998: 25–26, 146–147). Participants will stick with maintaining expectations that generate less utility than alternative combinations that they could in principle just as well adopt if only they were able to collectively decide to do so in a simultaneous choice of alternative expectations that would re-lock them in a more Pareto-efficient Nash equilibrium.…”