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- Title
When Does Communication Improve Coordination?
- Authors
Ellingsen, Tore; Östling, Robert
- Abstract
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 2×2 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 × 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. (JEL C72, D83)
- Subjects
GAME theory; NASH equilibrium; COMMUNICATION; GAMES of strategy (Mathematics); DECISION making; GAMES
- Publication
American Economic Review, 2010, Vol 100, Issue 4, p1695
- ISSN
0002-8282
- Publication type
Article
- DOI
10.1257/aer.100.4.1695