Communication and Efficiency in Competitive Coordination Games

Institute for Empirical Research in Economics, University of Zurich Working Paper No. 505

47 Pages Posted: 9 Sep 2010 Last revised: 9 May 2012

See all articles by Timothy N. Cason

Timothy N. Cason

Purdue University - Krannert School of Management

Roman M. Sheremeta

Case Western Reserve University

Jingjing Zhang

University of Zurich - Department of Economics

Date Written: June 21, 2010

Abstract

Costless pre-play communication has been found to effectively facilitate coordination and enhance efficiency in games with Pareto-ranked equilibria. We report an experiment in which two groups compete in a weakest-link contest by expending costly efforts. Allowing intra-group communication leads to more aggressive competition and greater coordination than control treatments without any communication. On the other hand, allowing inter-group communication leads to less destructive competition. As a result, intra-group communication decreases while inter-group communication increases payoffs. Our experiment thus provides an example of an environment where communication can either enhance or damage efficiency. This contrasts sharply with experimental findings from public goods and other coordination games, where communication always enhances efficiency and often leads to socially optimal outcomes.

Keywords: Contest, between-group competition, within-group competition, cooperation, coordination, free-riding, experiments

JEL Classification: C70, D72, H41

Suggested Citation

Cason, Timothy N. and Sheremeta, Roman M. and Zhang, Jingjing, Communication and Efficiency in Competitive Coordination Games (June 21, 2010). Institute for Empirical Research in Economics, University of Zurich Working Paper No. 505. Available at SSRN: https://ssrn.com/abstract=1673176 or http://dx.doi.org/10.2139/ssrn.1673176

Timothy N. Cason (Contact Author)

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States
765-494-1737 (Phone)

Roman M. Sheremeta

Case Western Reserve University ( email )

10900 Euclid Ave.
Cleveland, OH 44106
United States

Jingjing Zhang

University of Zurich - Department of Economics ( email )

Blümlisalpstrasse 10
Zurich, 8006
Switzerland

HOME PAGE: http://www.econ.uzh.ch/faculty/zhang.html

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