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Identifying the reasons for coordination failure in a laboratory experiment

Philipp Külpmann () and Davit Khantadze
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Davit Khantadze: Center for Mathematical Economics, Bielefeld University

No 567, Center for Mathematical Economics Working Papers from Center for Mathematical Economics, Bielefeld University

Abstract: We investigate the effect of absence of common knowledge on the outcomes of coordination games in a laboratory experiment. Using cognitive types, we can explain coordination failure in pure coordination games while differentiating between coordination failure due to first- and higher-order beliefs. In our experiment, around 76% of the subjects have chosen the payoff-dominant equilibrium strategy despite the absence of common knowledge. However, 9% of the players had first-order beliefs that lead to coordination failure and another 9% exhibited coordination failure due to higher-order beliefs. Furthermore, we compare our results with predictions of commonly used models of higher-order beliefs.

Keywords: Higher-order beliefs; coordination failure; cognitive abilities; experimental economics; game theory (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-gth
Date: 2016-09-26
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https://pub.uni-bielefeld.de/download/2905865/2905866 First Version, 2016 (application/x-download)

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Working Paper: Identifying the Reasons for Coordination Failure in a Laboratory Experiment (2016) Downloads
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