19 - coordination and communication

Question 1

Cooper et al 1992
recap

Answer 1

• subjects groups in cohorts of 11
• payoffs in points
• each player plays 2 player game against every other player in the cohort, repeated in 2nd phase
• already looked at non-communication treatment
• now look at communication treatment

Question 2

what is the exerimental design of
Cooper et al 1992

Answer 2

• get subjects to play 2 games - SCG, CCG
• 3 communication treatments

Question 3

what are the 3 communication treatments

cooper

Answer 3

1. no communication - players simultaenously + independently choose strategies
2. one-way communication
   - one player sends message of what the intend to play
3. two way communication
   - each player sends what they intend to play

Question 4

what is the SCG
simple cood game

Answer 4

• 2 NE
• R,R is preferred by both players but is risky

Question 5

what is CCG
complex

Answer 5

L,L and C,C are NE
C,C pareto dominates L,L

R,R pareto dominant - but not NE - incentive to switch to get higher payoff

Question 6

will the communication help

Answer 6

• stated plans - not commitments
• no replies
• no scope to make supporting arguments/appeals
• point to where they might go
• but may not be believed by receiver
• sender is not sure that receiver will believe
• 2 way - both know what each others intentions are - more certainty?

Question 7

results of SCG
amongst the 3 treatments

Answer 7

1. no communication
   - pareto inferior L,L nearly always played
2. one way
   - R,R played 53% of time
   - inferior is still played
   - disequilibrium in cases
   * of the messages 144 R - only 60% followed by R,R
3. two way
   - R,R played 91% of cases
   - all messages are R,R

Question 8

what can we infer from SCG one way results

Answer 8

• one way communication can help reach the preferred e - but is not perfect
• not the case that commincation is believed so people after R message R,R not always reached
• some people also still sent L messages - why? - after L message L,L almost always reached
• 2 way increases belief and confidence - more likely to reach coordination

Question 9

what are the results from CCG

Answer 9

1. no communication
   - pareto inferior most common, but also high disequilibrium
2. one way
   - C,C played 67%
   - inferior and disequilibrium still present
   - majority of R messages were not followed through
   - C messages were common and helpful
3. two way
   - C,C reach 30%
   - inferior and disequilibrium widespread
   - few C,C messages but almost all followed through
   - R messages common but followed by (L,L)
   * C messages only help if both send

Question 10

take away from
Cooper et al 1992

Answer 10

• communication raises frequency of pareto superior equilibrium in both games - relative to no communication
• 2 way communication helps more in SCG than CCG compared to 1 way

Question 11

Brandt & Cooper 2006

Answer 11

corporate turnaround with communication
- each firm 4 employees, 5 possible actions of effort
* communication from manager - external voice

Question 12

what were BC communication conditions
subject manager

Answer 12

1. no communication
   - manager only informs employees of bonus rate at start of each round
2. one way
   - manager sends verbal message to all employees
3. two way
   - manager sends verbal message to all employees and employee can send a message to manager when communicating their effort level

• free form messages - non-binding

Question 13

BC
results
by treatment

Answer 13

1. no communication
   - lowest average minimum effort in firm
2. one way
   - increases average relative to no communication
3. two way
   - biggest increase in average

Question 14

key takeaway from
BC

Answer 14

• communication can act as coordinating device
• positive effect of communication on minimum effort in firm - especially 2 way

Question 15

BC
analysis on message content

Answer 15

• most effective strat: explicitly request high effort, point out mutual benefits

Question 16

what factors affect how well players coordinate

Answer 16

1. e payoffs, dise payoffs
2. changes in incentives - bonus
3. histroy
4. communication among players/external figures