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Bounded best-response and collective-optimality reasoning in coordination games

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  • Faillo, Marco
  • Smerilli, Alessandra
  • Sugden, Robert
Abstract
We investigate experimentally the conditions under which bounded best-response and collective-optimality reasoning are used in coordination games. Using level-k and team reasoning theories as exemplars, we study games with three pure-strategy equilibria, two of which are mutually isomorphic. The third is always team-optimal, but whether it is predicted by level-k theory differs across games. We find that collective-optimality reasoning is facilitated if the collectively optimal equilibrium gives more equal payoffs than the others, and is inhibited if that equilibrium is Pareto-dominated by the others, considered separately. We suggest that coordination cannot be explained by a single theory.

Suggested Citation

  • Faillo, Marco & Smerilli, Alessandra & Sugden, Robert, 2017. "Bounded best-response and collective-optimality reasoning in coordination games," Journal of Economic Behavior & Organization, Elsevier, vol. 140(C), pages 317-335.
    • Handle: RePEc:eee:jeborg:v:140:y:2017:i:c:p:317-335
    DOI: 10.1016/j.jebo.2017.05.015
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    4. Gueye, Mamadou & Quérou, Nicolas & Soubeyran, Raphael, 2020. "Social preferences and coordination: An experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 173(C), pages 26-54.
    5. Dai, Zhixin & Zheng, Jiwei & Zizzo, Daniel John, 2024. "Theories of reasoning and focal point play with a matched non-student sample," China Economic Review, Elsevier, vol. 83(C).
    6. Guilhem Lecouteux, 2018. "What does “we” want? Team Reasoning, Game Theory, and Unselfish Behaviours," Revue d'économie politique, Dalloz, vol. 128(3), pages 311-332.
    7. Dietrichson, Jens & Gudmundsson, Jens & Jochem, Torsten, 2022. "Why don’t we talk about it? Communication and coordination in teams," Journal of Economic Behavior & Organization, Elsevier, vol. 197(C), pages 257-278.
    8. Zhixin Dai & Jiwei Zheng & Daniel John Zizzo, 2019. "Theories Of Reasoning and Focal Point Play With A Non-Student Sample," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 19-05, School of Economics, University of East Anglia, Norwich, UK..
    9. Irenaeus Wolff, 2023. "Heuristic Centered-Belief Players," TWI Research Paper Series 128, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
    10. Federica Nalli, 2021. "Robert Sugden’s theory of team reasoning: a critical reconstruction," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 68(1), pages 21-40, March.
    11. Dong, Zhiqiang & Zhang, Yanren, 2022. "Tournaments as coordination devices: Theory and experimental evidence," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 100(C).
    12. Della Valle, Nives & D'Arcangelo, Chiara & Faillo, Marco, 2024. "Promoting pro-environmental choices while addressing energy poverty," Energy Policy, Elsevier, vol. 186(C).
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    14. Elten, Jonas van & Penczynski, Stefan P., 2020. "Coordination games with asymmetric payoffs: An experimental study with intra-group communication," Journal of Economic Behavior & Organization, Elsevier, vol. 169(C), pages 158-188.
    15. Rojo Arjona, David & Sitzia, Stefania & Zheng, Jiwei, 2022. "Overcoming coordination failure in games with focal points: An experimental investigation," Games and Economic Behavior, Elsevier, vol. 136(C), pages 505-523.
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    17. David Rojo Arjona & Stefania Sitzia & Jiwei Zheng, 2021. "Overcoming coordination failure in games with focal points," Working Papers 335109305, Lancaster University Management School, Economics Department.

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    More about this item

    Keywords

    Team reasoning; Level-k theory; Coordination games;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • C9 - Mathematical and Quantitative Methods - - Design of Experiments

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