Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/200437
Authors: 
Chierchia, Gabriele
Tufano, Fabio
Coricelli, Giorgio
Year of Publication: 
2017
Series/Report no.: 
CeDEx Discussion Paper Series No. 2017-03
Abstract: 
It is commonly assumed that friendship should decrease strategic uncertainty in games involving tacit coordination. However, this has never been tested on two "opposite poles" of coordination, namely, games of strategic complements and substitutes. We present an experimental study having participants interacting with either a friend or a stranger in two classic games: (i.) the stag hunt game, which exhibits strategic complementarity; (ii.) the entry game, which exhibits strategic substitutability. Both games capture a frequent trade-off between a potentially high paying but uncertain action and a lower paying but safe alternative. We find that, relative to strangers, friends exhibit a propensity towards uncertainty in the stag hunt game, but an aversion to uncertainty in the entry game. Friends also "trembled" less than strangers in the stag hunt game but this advantage was lost in the entry game. We further investigate the role of interpersonal similarities and friendship qualities on friendship's differential impact on uncertainty across games of strategic complements and substitutes.
Subjects: 
coordination
entry game
friendship
strategic complementarity
strategic substitutability
stag hunt game
strategic uncertainty
JEL: 
C72
C92
D80
Document Type: 
Working Paper

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