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Common and almost common knowledge of credible assignments in a coordination game

Author

Listed:
  • Ananish Chaudhuri

    (Department of Economics, University of Auckland)

  • Chenan Zhou

    (Department of Accounting and Finance, University of Auckland)

  • Parapin Prak

    (Department of Economics, University of Auckland)

  • Laura Bangun

    (Department of Economics, University of Auckland)

Abstract

We build on Van Huyck, Gillette and Battalio (1992) and examine the efficacy of credible assignments in a stag-hunt type coordination game with two Pareto-ranked equilibria, one payoff dominant and the other risk dominant. The majority of our subjects fail to coordinate to the payoff dominant outcome when no assignment is made. However, the majority of them always coordinate to the payoff dominant outcome when an assignment is made. This happens regardless of whether the assignment is “almost common knowledge” or “common knowledge”.

Suggested Citation

  • Ananish Chaudhuri & Chenan Zhou & Parapin Prak & Laura Bangun, 2006. "Common and almost common knowledge of credible assignments in a coordination game," Economics Bulletin, AccessEcon, vol. 3(1), pages 1-10.
    • Handle: RePEc:ebl:ecbull:eb-05c90025
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    File URL: http://www.accessecon.com/pubs/EB/2006/Volume3/EB-05C90025A.pdf
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    References listed on IDEAS

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    1. Van Huyck, John B & Battalio, Raymond C & Beil, Richard O, 1990. "Tacit Coordination Games, Strategic Uncertainty, and Coordination Failure," American Economic Review, American Economic Association, vol. 80(1), pages 234-248, March.
    2. Rydval, Ondrej & Ortmann, Andreas, 2005. "Loss avoidance as selection principle: Evidence from simple stag-hunt games," Economics Letters, Elsevier, vol. 88(1), pages 101-107, July.
    3. Van Huyck, John B. & Gillette, Ann B. & Battalio, Raymond C., 1992. "Credible assignments in coordination games," Games and Economic Behavior, Elsevier, vol. 4(4), pages 606-626, October.
    4. Cooper, Russell, et al, 1990. "Selection Criteria in Coordination Games: Some Experimental Results," American Economic Review, American Economic Association, vol. 80(1), pages 218-233, March.
    5. Russell Cooper & Douglas V. DeJong & Robert Forsythe & Thomas W. Ross, 1992. "Communication in Coordination Games," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 739-771.
    6. Rubinstein, Ariel, 1989. "The Electronic Mail Game: Strategic Behavior under "Almost Common Knowledge."," American Economic Review, American Economic Association, vol. 79(3), pages 385-391, June.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Giovanna Devetag & Andreas Ortmann, 2007. "When and why? A critical survey on coordination failure in the laboratory," Experimental Economics, Springer;Economic Science Association, vol. 10(3), pages 331-344, September.
    2. Radu Vranceanu & Damien Besancenot & Delphine Dubart, 2014. "Can Rumors and Other Uninformative Messages Cause Illiquidity ?," CEPN Working Papers hal-00841167, HAL.
    3. Dugar, Subhasish, 2010. "Nonmonetary sanctions and rewards in an experimental coordination game," Journal of Economic Behavior & Organization, Elsevier, vol. 73(3), pages 377-386, March.
    4. Cary Deck & Nikos Nikiforakis, 2012. "Perfect and imperfect real-time monitoring in a minimum-effort game," Experimental Economics, Springer;Economic Science Association, vol. 15(1), pages 71-88, March.
    5. Bolton Gary E. & Feldhaus Christoph & Ockenfels Axel, 2016. "Social Interaction Promotes Risk Taking in a Stag Hunt Game," German Economic Review, De Gruyter, vol. 17(3), pages 409-423, August.
    6. Chaudhuri, Ananish & Paichayontvijit, Tirnud & So, Tony, 2015. "Team versus individual behavior in the minimum effort coordination game," Journal of Economic Psychology, Elsevier, vol. 47(C), pages 85-102.
    7. Radu, Vranceanu & Besancenot, Damien & Dubart, Delphine, 2013. "Can Rumors and Other Uninformative Messages Cause Illiquidity ?," ESSEC Working Papers WP1309, ESSEC Research Center, ESSEC Business School, revised Jun 2014.
    8. Ananish Chaudhuri & Tony So & Erwann Sbai, 2017. "Pay cuts and layoffs in an experimental minimum effort coordination game," Economics Bulletin, AccessEcon, vol. 37(3), pages 2181-2197.
    9. Giovanna Devetag & Hykel Hosni & Giacomo Sillari, 2012. "You Better Play 7: Mutual versus Common Knowledge of Advice in a Weak-link Experiment," CEEL Working Papers 1201, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
    10. repec:hal:journl:hal-00841167 is not listed on IDEAS
    11. Jia Liu & Yohanes E. Riyanto, 2017. "Information transparency and equilibrium selection in coordination games: an experimental study," Theory and Decision, Springer, vol. 82(3), pages 415-433, March.

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    More about this item

    Keywords

    Coordination;

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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