Competition as a Coordination Device

Joachim Weimann and Thomas Riechmann

No 196, Computing in Economics and Finance 2004 from Society for Computational Economics

Abstract: The problem of coordination failure, particularly in "team production" situations, is central to a large number of mircroeconomic as well as macroeconomic models. As this type of inefficient coordination poses a severe economic problem, there is a need for institutions fostering efficient coordination of individual economic plans. In this paper, we introduce a rather classical such economic institution: Competition. In a series of laboratory experiments, we reveal that the true reason for coordination failure is strategic uncertainty which can be reduced almost completely by introducing a appropriately designed meachnism of (inter-group) competition

Keywords: coordination failure; team production; competition (search for similar items in EconPapers)
JEL-codes: C72 (search for similar items in EconPapers)
Date: 2004-08-11
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:sce:scecf4:196

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