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Coordination via Redistribution

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  • Andrea Martinangeli
  • Peter Martinsson
  • Amrish Patel

Abstract

Can prior voluntary redistribution improve coordination? We theoretically show that distributive preferences, forward induction and signalling all imply that it can. We then experimentally test our predictions by allowing subjects to redistribute part of their endowment before playing a battle of the sexes game. To identify whether the redistribution option increases coordination, and why, we also run experiments with no redistribution and forced redistribution. Our results show that the redistribution option does indeed signiï¬ cantly increase coordination. Disentangling the reasons why, we ï¬ nd that behaviour is most consistent with distributive preferences and one-step of forward induction (rather than signalling or two-steps of forward induction).

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  • Andrea Martinangeli & Peter Martinsson & Amrish Patel, 2017. "Coordination via Redistribution," Working Papers tax-mpg-rps-2017-07, Max Planck Institute for Tax Law and Public Finance.
    • Handle: RePEc:mpi:wpaper:tax-mpg-rps-2017-07
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    Cited by:

    1. Jan Libich & Dat Thanh Nguyen, 2022. "When a compromise gets compromised by another compromise," Australian Economic Papers, Wiley Blackwell, vol. 61(4), pages 678-716, December.

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    More about this item

    Keywords

    Coordination; redistribution; experiment; distributive preferences; forward induction; signalling altruism;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact

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