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A Road to Efficiency through Communication and Commitment

Resource type
Authors/contributors
Title
A Road to Efficiency through Communication and Commitment
Abstract
We experimentally examine the efficacy of a novel pre-play institution in a well-known coordination game—the minimum-effort game—in which coordination failures are robust and persistent phenomena. This new institution allows agents to communicate while incrementally committing to their words, leading to a distinct theoretical prediction: the efficient outcome is uniquely selected in the extended coordination game. We find that commitment-enhanced communication significantly increases subjects' payoffs and achieves higher efficiency levels than various nonbinding forms of communication. We further identify the key ingredients of the institution that are central to achieving such gains.
Publication
American Economic Review
Volume
113
Issue
9
Pages
2355-81
Date
2023-09
Citation
Avoyan, A., & Ramos, J. (2023). A Road to Efficiency through Communication and Commitment. American Economic Review, 113, 2355–2381.
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