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An experimental study of costly coordination

Goeree, Jacob K. and Holt, Charles A. (2005) An experimental study of costly coordination. Games and Economic Behavior, 51 (2). pp. 349-364. ISSN 0899-8256.

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This paper reports data for coordination game experiments with random matching. The experimental design is based on changes in an effort-cost parameter, which do not alter the set of Nash equilibria nor do they alter the predictions of adjustment theories based on imitation or best response dynamics. As expected, however, increasing the effort cost lowers effort levels. Maximization of a stochastic potential function, a concept that generalizes risk dominance to continuous games, predicts this reduction in efforts. An error parameter estimated from initial two-person, minimum-effort games is used to predict behavior in other three-person coordination games.

Item Type:Article
Additional Information:Author preprint. Published version: Copyright © 2004 Elsevier Inc. Received 23 December 1999. Available online 5 November 2004. This project was funded in part by the National Science Foundation (SBR-9818683). We wish to thank Vince Crawford and Robert Rosenthal for useful discussion and Rachel Parkin for research assistance.
Subject Keywords:Coordination games; Stochastic potential; Logit equilibrium; Out-of-sample prediction; Laboratory experiments
Record Number:CaltechAUTHORS:GOEgeb05
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:5767
Deposited By: Lindsay Cleary
Deposited On:01 Nov 2006
Last Modified:26 Dec 2012 09:15

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