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When Does Communication Improve Coordination?
Stockholm University, Faculty of Social Sciences, Institute for International Economic Studies.
2010 (English)In: The American Economic Review, ISSN 0002-8282, E-ISSN 1944-7981, Vol. 100, no 4, 1695-1724 p.Article in journal (Refereed) Published
Abstract [en]

We study costless pre-play communication of intentions among inexperienced players. Using the level-k model of strategic thinking to describe players' beliefs, we fully characterize the effects of preplay communication in symmetric 2 x 2 games. One-way communication weakly increases coordination on Nash equilibrium outcomes, although average payoffs sometimes decrease. Two-way communication further improves payoffs in some games but is detrimental in others. Moving beyond the class of symmetric 2 x 2 games, we find that communication facilitates coordination in common interest games with positive spillovers and strategic complementarities, but there are also games in which any type of communication hampers coordination.

Place, publisher, year, edition, pages
2010. Vol. 100, no 4, 1695-1724 p.
National Category
Economics and Business
URN: urn:nbn:se:su:diva-49137DOI: 10.1257/aer.100.4.1695ISI: 000281911400015OAI: diva2:376346
authorCount :2Available from: 2010-12-10 Created: 2010-12-10 Last updated: 2010-12-10Bibliographically approved

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Östling, Robert
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