Overcoming coordination failure using a mechanism based on gradualism and endogeneity

Yoshio Kamijo, Hiroki Ozono, Kazumi Shimizu

    Research output: Contribution to journalArticle

    4 Citations (Scopus)

    Abstract

    We examine three tools that can enhance coordination success in a repeated multiple-choice coordination game. Gradualism means that the game starts as an easy coordination problem and moves gradually to a more difficult one. The Endogenous Ascending mechanism implies that a gradual increase in the upper bound of coordination occurs only if coordination with the Pareto superior equilibrium in a stage game is attained. The Endogenous Descending mechanism requires that when the game’s participants fail to coordinate, the level of the next coordination game be adjusted such that the game becomes simpler. We show that gradualism may not always work, but in such instances, its effect can be reinforced by endogeneity. Our laboratory experiment provides evidence that a mechanism that combines three tools, herein termed the “Gradualism with Endogenous Ascending and Descending (GEAD)” mechanism, works well. We discuss how the GEAD mechanism can be applied to real-life situations that suffer from coordination failure.

    Original languageEnglish
    Pages (from-to)202-217
    Number of pages16
    JournalExperimental Economics
    Volume19
    Issue number1
    DOIs
    Publication statusPublished - 2016 Mar 1

    Keywords

    • Coordination failure
    • Endogenous ascending
    • Endogenous descending
    • Gradualism
    • Laboratory experiment
    • Minimum effort coordination game
    • Target adjustment

    ASJC Scopus subject areas

    • Economics, Econometrics and Finance (miscellaneous)

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