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Efficient Coordination in Weakest-Link Games

Arno Riedl, Ingrid Rohde and Martin Strobel

No 57, Research Memorandum from Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR)

Abstract: Existing experimental research on behavior in weakest-link games shows overwhelmingly theinability of people to coordinate on the efficient equilibrium, especially in larger groups. Wehypothesize that people will be able to coordinate on efficient outcomes, provided they havesufficient freedom to choose their interaction neighborhood. We conduct experiments with mediumsized and large groups and show that neighborhood choice indeed leads to coordination on the fullyefficient equilibrium, irrespective of group size. This leads to substantial welfare effects.Achieved welfare is between 40 and 60 percent higher in games with neighborhood choice thanwithout neighborhood choice. We identify exclusion as the simple but very effective mechanismunderlying this result. In early rounds, high performers exclude low performers who in consequence‘learn’ to become high performers.

Keywords: microeconomics (search for similar items in EconPapers)
Date: 2011
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Related works:
Journal Article: Efficient Coordination in Weakest-Link Games (2016) Downloads
Working Paper: Efficient Coordination in Weakest-Link Games (2011) Downloads
Working Paper: Efficient Coordination in Weakest-Link Games (2011) Downloads
Working Paper: Efficient Coordination in Weakest-Link Games (2011) Downloads
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