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Compromise and coordination: An experimental study

Simin He and Jiabin Wu ()

Games and Economic Behavior, 2020, vol. 119, issue C, 216-233

Abstract: This study experimentally examines the role of a compromise option in a repeated battle-of-the-sexes game. In a random matching environment, we find that compromise serves as an effective focal point and facilitates coordination, but fails to improve efficiency. However, in a fixed-partnership environment, compromise deters subjects from learning to play alternation, which is a more efficient, but arguably more complex strategy. As a result, compromise hurts efficiency by allowing subjects to coordinate on the less efficient outcome. In a follow-up experiment, we find that many compromisers switch to alternation after playing the repeated game multiple times. These results suggest that subjects teach and learn to use the alternation strategy from each other.

Keywords: Compromise; Battle-of-the-sexes; Repeated games; Behavioral game theory; Experimental economics (search for similar items in EconPapers)
JEL-codes: C72 C92 (search for similar items in EconPapers)
Date: 2020
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Working Paper: Compromise and Coordination: An Experimental Study (2018) Downloads
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DOI: 10.1016/j.geb.2019.11.003

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