Information transparency and equilibrium selection in coordination games: an experimental study

Jia Liu () and Yohanes Riyanto
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Jia Liu: Newcastle University Business School

Theory and Decision, 2017, vol. 82, issue 3, No 7, 415-433

Abstract: Abstract We experimentally investigate the role of information transparency for equilibrium selection in stag hunt coordination games. These games can be transformed from a prisoner’s dilemma game by introducing a centralized reward or punishment scheme. We aim to explore the impact of the disclosure of information on how final payoffs are derived on players’ incentive to coordinate on the payoff-dominant equilibrium. We find that such information disclosure significantly increases the tendency of players to play the payoff-dominant strategy and reduces the occurrence of coordination failure. The mechanism works directly through the positive impact of disclosure on the saliency of the payoff-dominant equilibrium, and indirectly through the positive influence of disclosure on players’ belief about the likelihood of cooperation by the opponent.

Keywords: Coordination games; Equilibrium selection; Information disclosure; Centralized reward; Centralized punishment (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1007/s11238-016-9572-x

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