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The Differential Impact of Friendship on Cooperative and Competitive Coordination

Gabriele Chierchia (), Fabio Tufano () and Giorgio Coricelli ()
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Gabriele Chierchia: University of Trento, and University College London
Giorgio Coricelli: University of Trento, Italy, and University of Southern California

No 2020-07, Discussion Papers from The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham

Abstract: Friendship is commonly assumed to reduce strategic uncertainty and enhance tacit coordination. However, this assumption has never been tested across two opposite poles of coordination involving either strategic complementarity or substitutability. We had participants interact with friends or strangers in two classic coordination games: the stag hunt game, which exhibits strategic complementarity and may foster 'cooperation', and the entry game, which exhibits strategic substitutability and may foster 'competition'. Both games capture a frequent trade-off between a potentially high paying but uncertain option and a low paying but safe alternative. We find that, relative to strangers, friends are more likely to choose options involving uncertainty in stag hunt games but the opposite is true in entry games. Furthermore, in stag hunt games, friends 'tremble' less between options, coordinate better and earn more, but these advantages are largely decreased or lost in entry games. We further investigate how these effects are modulated by risk attitudes, friendship qualities and interpersonal similarities.

Keywords: coordination; entry game; friendship; strategic complementarity; strategic substitutability; stag hunt game; strategic uncertainty (search for similar items in EconPapers)
Date: 2020-07
New Economics Papers: this item is included in nep-exp, nep-gth and nep-soc
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