Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/111182
Authors: 
Blume, Andreas
Kriss, Peter H.
Weber, Roberto
Year of Publication: 
2014
Series/Report no.: 
Working Paper Series, University of Zurich, Department of Economics 34 [rev.]
Abstract: 
We study communication in a two-player coordination game with Pareto-ranked equilibria. Prior research demonstrates that efficient coordination is difficult without communication but obtains regularly with (mandatory) costless pre-play messages. In a laboratory experiment, we modify communication by making the sending of messages optional and costly. Even small costs dramatically reduce message use, but efficient coordination of actions occurs with similar frequency to that observed under costless communication. Our results can be accounted for by Govindan and Wilson's formalization of forward induction (GW-FI), which selects, among the pure-strategy equilibrium outcomes, the one in which efficiency is achieved without communication. Consistent with the introspective character of GW-FI, the fraction of players who achieve efficient coordination by forgoing the use of reasonably costly optional messages is substantial from the first period, is remarkably stable at that level, and is not significantly affected by learning.
Subjects: 
Coordination
communication
forward induction
experiment
stag hunt
JEL: 
C72
C92
D83
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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