35 Pages Posted: 18 Jan 2014 Last revised: 13 Apr 2014
Date Written: April 2014
We examine different populations' play in coordination games in online experiments with over a thousand subjects. Subjects played a two-player coordination game that had multiple equilibria: two equilibria with highly asymmetric payoffs and another equilibrium with symmetric payoffs but a slightly lower total payoff. Subjects were predominantly from India and the United States.
Subjects residing in India played the strategies leading to asymmetric payoffs significantly more frequently than subjects residing in the U.S. who showed a greater play of the strategy leading to the symmetric payoffs. In addition, when prompted to play asymmetrically, the population from India responded even more significantly than those from the U.S. Overall, subjects' predictions of how others would play were more accurate when the other player was from their own populations, and they coordinated significantly more frequently and earned significantly higher payoffs when matched with other subjects from their own population than when matched across populations.
Keywords: Homophily, Coordination, Culture, Convention, Social networks
JEL Classification: D85, C72, A14
Suggested Citation: Suggested Citation