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Dynamic coordination via organizational routines

Author

Listed:
  • Andreas Blume

    (University of Pittsburgh)

  • April M. Franco

    (Rotman School of Management, University of Toronto)

  • Paul Heidhues

    (ESMT European School of Management and Technology)

Abstract

We investigate dynamic coordination among members of a problem-solving team who receive private signals about which of their actions are required for a (static) coordinated solution and who have repeated opportunities to explore different action combinations. In this environment ordinal equilibria, in which agents condition only on how their signals rank their actions and not on signal strength, lead to simple patterns of behavior that have a natural interpretation as routines. These routines partially solve the team's coordination problem by synchronizing the team's search efforts and prove to be resilient to changes in the environment by being ex post equilibria, to agents having only a coarse understanding of other agents' strategies by being fully cursed, and to natural forms of agents' overconfidence. The price of this resilience is that optimal routines are frequently suboptimal equilibria.

Suggested Citation

  • Andreas Blume & April M. Franco & Paul Heidhues, 2011. "Dynamic coordination via organizational routines," ESMT Research Working Papers ESMT-11-10, ESMT European School of Management and Technology.
    • Handle: RePEc:esm:wpaper:esmt-11-10
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    References listed on IDEAS

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    More about this item

    Keywords

    coordination games; organizational routines; decentralized information; ex-post equilibria; cursed equilibria; multi-agent learning; rational learning;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights

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