American Economic Review Vol. 102 No. 7 2012

Who Matters in Coordination Problems?

József Sákovics¹; Jakub Steiner²

¹ The University of Edinburgh, School of Economics, 31 Buccleuch Place, Edinburgh, EH8 9JT, United Kingdom. · ² CERGE-EI, joint workplace of Charles University Prague and the Economics Institute of the Academy of Sciences of the Czech Republic, Politických vězňu˙ 7, Praha, Czech Republic and Northwestern University.

Abstract

Agents face a coordination problem akin to the adoption of a network technology. A principal announces investment subsidies that, at minimal cost, attain a given likelihood of successful coordination. Optimal subsidies target agents who impose high externalities on others and on whom others impose low externalities. Based on the analysis of the role of strategic uncertainty in coordination processes, we provide a methodology that can be used to find the optimal targets for a variety of interventions in a large class of coordination problems with heterogeneous agents.

DOI

10.1257/aer.102.7.3439

Volume

102

Issue

7

Pages

3439-3461

Language

en

Sources

openalex bibtex:phds-export.bib crossref

Cite

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