A Road to Efficiency through Communication and Commitment
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Series
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Speaker(s)Ala Avoyan (Indiana University, United States)
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FieldBehavioral Economics
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LocationUniversity 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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