Coordination failure caused by sunspots
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Coordination failure caused by sunspots. / Beugnot, Julie ; Gürgüç , Zeynep ; Øvlisen, Frederik Roose; Roos , Michael M. W. .
In: Economics Bulletin, Vol. 32, No. 4, 2012, p. 2860-2869.Research output: Contribution to journal › Journal article › Research › peer-review
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TY - JOUR
T1 - Coordination failure caused by sunspots
AU - Beugnot, Julie
AU - Gürgüç , Zeynep
AU - Øvlisen, Frederik Roose
AU - Roos , Michael M. W.
N1 - Jel classification: C9; C7
PY - 2012
Y1 - 2012
N2 - In a coordination game with Pareto-ranked equilibria, we study whether a sunspot can lead to either coordination on an inferior equilibrium (mis-coordination) or to out-of equilibrium behavior (dis-coordination). While much of the literature searches for mechanisms to attain coordination on the efficient equilibrium, we consider sunspots as a potential reason for coordination failure. We conduct an experiment with a three player 2x2x2 game in which coordination on the efficient equilibrium is easy and should normally occur. In the control session, we find almost perfect coordination on the payoff-dominant equilibrium, but in the sunspot treatment, dis-coordination is frequent. Sunspots lead to significant inefficiency, and we conclude that sunspots can indeed cause coordination failure.
AB - In a coordination game with Pareto-ranked equilibria, we study whether a sunspot can lead to either coordination on an inferior equilibrium (mis-coordination) or to out-of equilibrium behavior (dis-coordination). While much of the literature searches for mechanisms to attain coordination on the efficient equilibrium, we consider sunspots as a potential reason for coordination failure. We conduct an experiment with a three player 2x2x2 game in which coordination on the efficient equilibrium is easy and should normally occur. In the control session, we find almost perfect coordination on the payoff-dominant equilibrium, but in the sunspot treatment, dis-coordination is frequent. Sunspots lead to significant inefficiency, and we conclude that sunspots can indeed cause coordination failure.
KW - Faculty of Social Sciences
KW - sunspots
KW - coordination game
KW - multiple Pareto-ranked equilibria
KW - experiment
M3 - Journal article
VL - 32
SP - 2860
EP - 2869
JO - Economics Bulletin
JF - Economics Bulletin
SN - 1545-2921
IS - 4
ER -
ID: 43213863