Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/228371
Authors: 
Chierchia, Gabriele
Tufano, Fabio
Coricelli, Giorgio
Year of Publication: 
2020
Series/Report no.: 
CeDEx Discussion Paper Series No. 2020-07
Abstract: 
Friendship is commonly assumed to reduce strategic uncertainty and enhance tacit coordination. However, this assumption has never been tested across two opposite poles of coordination involving either strategic complementarity or substitutability. We had participants interact with friends or strangers in two classic coordination games: the stag hunt game, which exhibits strategic complementarity and may foster "cooperation", and the entry game, which exhibits strategic substitutability and may foster "competition". Both games capture a frequent trade-off between a potentially high paying but uncertain option and a low paying but safe alternative.We find that, relative to strangers, friends are more likely to choose options involving uncertainty in stag hunt games but the opposite is true in entry games. Furthermore, in stag hunt games, friends "tremble" less between options, coordinate better and earn more, but these advantages are largely decreased or lost in entry games. We further investigate how these effects are modulated by risk attitudes, friendship qualities and interpersonal similarities.
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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