Tacit Coordination in a Decentralized Market Entry Game with Fixed Capacity

Rami Zwick () and Amnon Rapoport
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Amnon Rapoport: Hong Kong University of Science and Technology

Experimental from University Library of Munich, Germany

Abstract: Tacit coordination is studied experimentally in a class of iterated market entry games with a relatively small number of potential entrants (n = 6), symmetric players, and fixed entry fees. These games are intended to simulate a situation where a newly emergent market opportunity may be fruitfully exploited by no more than a fixed and commonly known number of firms. Our results indicate a high degree of sensitivity to the game parameters that are manipulated in the study, namely, the market capacity, entry fee, and method of subject assignment to groups (fixed vs. random), as well as sophisticated adaptation to actual and hypothetical changes in wealth level. We find no support for convergence to equilibrium play on either the aggregate or individual level or for any trend across rounds of play to maximize total group payoff by lowering the frequency of entry. The coordination failure is attributed to certain features of the payoff function that induce strong competition in the attempt to penetrate the market.

Keywords: Tacit Coordination; Market Entry Game; Experiment (search for similar items in EconPapers)
JEL-codes: C72 (search for similar items in EconPapers)
Pages: 42 pages
Date: 1999-03-16
Note: Type of Document - Acrobat PDF; prepared on PC; to print on PostScript; pages: 42 ; figures: included
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Citations: View citations in EconPapers (2)

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Journal Article: Tacit Coordination in a Decentralized Market Entry Game with Fixed Capacity (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpex:9903001

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