Most large real-world organizations contain multiple smaller groups, such as working groups within firms. However, can this sort of nested groups be used to alleviate coordination failures in the larger group? We report on a multi-player Stag Hunt experiment wherein we hierarchically structure a large group into mutually exclusive small groups. We offer varying incentive payments if efficient coordination is achieved at a large or small group level. The novelty of our design is that we hold the total payment size constant between treatments. In our nested incentive treatment, we reduce the reward for achieving large-group coordination by a small amount and reallocate the same amount to successful small-group coordination. The results reveal that incentive reallocations privileging small groups facilitate efficient large-group coordination in the nested group structure.

Players often fail to coordinate on the efficient equilibrium in laboratory weak-link coordination games. In this paper, we investigate whether such coordination failures can be mitigated by increasing the number of rounds or altering per-period stakes. We find that neither time horizon nor stakes affect equilibrium selection. In contrast to previous findings, players are not more likely to play above the previous period’s minimum choice when the horizon is longer or per-period stakes lower. We also investigate which socio-demographic factors and behavioral traits correlate most strongly with play both in the first round and in subsequent rounds. Cognitive ability as measured by a cognitive reflection test stands out as the characteristic that is most strongly associated with efficient coordination.

The article proposes an economic theory of customary measurement systems. The form of such systems is driven by two transaction-cost factors: minimising costs of implementation, and coordinating on shared standards. These factors combine to yield seven principles of customary measurement, supported with illustrative examples from the traditional Anglo-American, Egyptian, Greek, Roman, Chinese, and Indian measurement systems. The theory illuminates various confounding features of such systems, including ubiquitous binary patterns, frequent appearance of duodecimal ratios, and persistence of trade-specific measures.

The problems of how self-interested players can cooperate despite incentives to defect, and how players can coordinate despite the presence of multiple equilibria, are among the oldest and most fundamental in game theory. In this report, we demonstrate that a plausible and even natural specification of the reference outcome in a game simultaneously predicts systematic cooperation and defection in the Prisoner’s Dilemma, as well as equilibrium selection and out-of-equilibrium play in coordination games. The predictions hold even if players are purely self-interested, there are no salient labels, the game is played only once, and there is no communication of any kind. Furthermore, the predictions are unique, as opposed to the multiplicity of equilibria in the infinitely repeated Prisoner’s Dilemma and in coordination games. We apply experimental results to test the predictions of the model.

Previous research in economics, social psychology, and sociology has producedcompelling evidence that social norms influence behavior. In this paper we applythe Krupka and Weber (2013) norm elicitation procedure and present U.S. andnon-U.S. born subjects with two scenarios for which tipping and punctualitynorms are known to vary across countries. We elicit shared beliefs by havingsubjects match appropriateness ratings of different actions (such as arrivinglate or on time) to another randomly selected participant from the sameuniversity or to a participant who is born in the same country. We also elicitpersonal beliefs without the matching task. We test whether the responses fromthe coordination task can be interpreted as social norms by comparing responsesfrom the coordination game with actual social norms (as identified usingindependent materials such as tipping guides for travelers). We compareresponses elicited with the matching tasks to those elicited without thematching task to test whether the coordination device itself is essential foridentifying social norms. We find that appropriateness ratings for differentactions vary with the reference group in the matching task. Further, the ratingsobtained from the matching task vary in a manner consistent with the actualsocial norms of that reference group. Thus, we find that shared beliefscorrespond more closely to externally validated social norms compared topersonal beliefs. Second, we highlight the importance that reference groups (forthe coordination task) can play.

In familiar models, a decrease in the friction facing mobile factors (e.g., lowering their adjustment costs) increases a coordination problem, leading to more circumstances where there are multiple equilibria. We show that a decrease in friction can decrease coordination problems when a production externality arises from a changing stock, e.g. of pollution or knowledge. In general, the relation between the amount of friction that mobile factors face and the likelihood of multiple equilibria is non-monotonic.

Research in anthropology has shown that kin terminologies have a complex combinatorial structure and vary systematically across cultures. This article argues that universals and variation in kin terminology result from the interaction of (1) an innate conceptual structure of kinship, homologous with conceptual structure in other domains, and (2) principles of optimal, “grammatical” communication active in language in general. Kin terms from two languages, English and Seneca, show how terminologies that look very different on the surface may result from variation in the rankings of a universal set of constraints. Constraints on kin terms form a system: some are concerned with absolute features of kin (sex), others with the position (distance and direction) of kin in “kinship space,” others with groups and group boundaries (matrilines, patrilines, generations, etc.). Also, kin terms sometimes extend indefinitely via recursion, and recursion in kin terminology has parallels with recursion in other areas of language. Thus the study of kinship sheds light on two areas of cognition, and their phylogeny. The conceptual structure of kinship seems to borrow its organization from the conceptual structure of space, while being specialized for representing genealogy. And the grammar of kinship looks like the product of an evolved grammar faculty, opportunistically active across traditional domains of semantics, syntax, and phonology. Grammar is best understood as an offshoot of a uniquely human capacity for playing coordination games.

In this paper we consider a two-stage duopoly game where firms first decide whether to invest in advertising and then compete in prices. Advertising has two effects: a market enlargement for both firms and a predatory gain for the investing firm only.

Both symmetric and asymmetric equilibria may arise. The two most interesting cases are a coordination game where both firms investing and non-investing are equilibria, and a chicken game where only one firm invests while the other is possibly driven (endogenously) out of the market. Our results suggest that product differentiation has an ambiguous impact on investment in advertising and that strong product substitutabihty may induce a coordination problem.

The aim of this paper is to evaluate to what extent more transparency can reduce the occurrence of speculative attacks. It proposes a survey of the literature about the pros and cons of transparency on the exchange rate market, which is one of the main pillars of the new international financial architecture. The effects of transparency are shown to be ambiguous both from a theoretical and empirical point of views. However, the imperfect connection resulting from the confrontation between theory and empirics suggests that some new insights are necessary in order to better catch stylised facts on the one hand and to better evaluate the theory on the other, as has been done in recent literature. This leads to new proposals for economic and informational policies.