Identifying the reasons for coordination failure in a laboratory experiment
Philipp Külpmann () and
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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
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
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https://pub.uni-bielefeld.de/download/2905865/2905866 First Version, 2016 (application/x-download)
Working Paper: Identifying the Reasons for Coordination Failure in a Laboratory Experiment (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:bie:wpaper:567
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