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Home | Events | A Road to Efficiency through Communication and Commitment
Seminar

A Road to Efficiency through Communication and Commitment


  • Series
  • Speaker(s)
    Ala Avoyan (Indiana University, United States)
  • Field
    Behavioral Economics
  • Location
    University of Amsterdam, Roeterseilandcampus, room E0.22
    Amsterdam
  • Date and time

    June 15, 2023
    16:00 - 17:15

Abstract

We experimentally examine the efficacy of a novel pre-play institution in a well-known coordination game—the minimum-effort game—in which coordination failures are robust and persistent phenomena. This new institution allows agents to communicate while incrementally committing to their words, leading to a distinct theoretical prediction: the efficient outcome is uniquely selected in the extended coordination game. We find that commitment-enhanced communication significantly increases subjects’ payoffs and achieves higher efficiency levels than various non-binding forms of communication. We further identify the key ingredients of the institution that are central to achieving such gains.

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