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

Faillo, Marco, Smerilli, Alessandra and Sugden, Robert (2017) Bounded best-response and collective-optimality reasoning in coordination games. Journal of Economic Behavior and Organization, 140. 317–335. ISSN 0167-2681

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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.

Item Type:	Article
Uncontrolled Keywords:	team reasoning,level-k theory,coordination games
Faculty \ School:	Faculty of Social Sciences > School of Economics
UEA Research Groups:	Faculty of Social Sciences > Research Centres > Centre for Competition Policy Faculty of Social Sciences > Research Groups > Economic Theory Faculty of Social Sciences > Research Centres > Centre for Behavioural and Experimental Social Sciences Faculty of Social Sciences > Research Groups > Behavioural Economics
Related URLs:	http://www.sciencedirect.com/science/art...
Depositing User:	Pure Connector
Date Deposited:	23 May 2017 05:05
Last Modified:	19 Apr 2023 21:32
URI:	https://ueaeprints.uea.ac.uk/id/eprint/63587
DOI:	10.1016/j.jebo.2017.05.015

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