Identifying the Reasons for Coordination Failure in a Laboratory Experiment

Philipp Külpmann and Davit Khantadze

2016 Papers from Job Market Papers

Abstract: In this paper, we use a laboratory experiment to investigate the effect of absence of common knowledge on the outcomes of coordination games. We introduce cognitive types into a pure coordination game in which there is no common knowledge about the distribution of cognitive types. In our experiment, around 76% of the subjects managed to coordinate on the payoff-dominant equilibrium despite the absence of common knowledge. However, around 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 different models of higher-order beliefs, commonly used in the literature.

JEL-codes: C72 C92 D83 (search for similar items in EconPapers)
Date: 2016-11-21
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-gth
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Working Paper: Identifying the reasons for coordination failure in a laboratory experiment (2016)
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