Competition as a Coordination Device. Experimental Evidence from a Minimum Effort Coordination Game

Thomas Riechmann () and Joachim Weimann

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Abstract: The problem of coordination failure, particularly in 'team production' situations, is central to a large number of mircroeconomic as well as macroeconomic models. As this type of inefficient coordination poses a severe economic problem, there is a need for institutions that foster efficient coordination of individual economic plans. In this paper, we introduce such a rather classical economic institution: competition. In a series of laboratory experiments, we reveal that the true reason for coordination failure is strategic uncertainty, which can be reduced almost completely by introducing a appropriately designed mechanism of (inter-group) competition.

Keywords: coordination failure; team production; competition (search for similar items in EconPapers)
JEL-codes: C72 C92 J33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-evo and nep-exp
Date: 2004-05-26
Note: Type of Document - pdf; pages: 25
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Related works:
Journal Article: Competition as a coordination device: Experimental evidence from a minimum effort coordination game (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpga:0405011

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