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Published May 2005 | Submitted
Journal Article Open

An experimental study of costly coordination


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.

Additional Information

© 2004 Elsevier Inc. Received 23 December 1999. Available online 5 November 2004. We gratefully acknowledge financial support from the National Science Foundation (SBR-9818683 and SBR-0094800), the Alfred P. Sloan Foundation, and the Dutch NWO (VICI 453.03.606). We thank Vince Crawford and Robert Rosenthal for useful discussion and Rachel Parkin for research assistance.

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