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Perfect and imperfect real-time monitoring in a minimum-effort game

Published online by Cambridge University Press:  14 March 2025

Cary Deck*
Affiliation:
Department of Economics, Walton College of Business, University of Arkansas, Fayetteville, USA
Nikos Nikiforakis*
Affiliation:
Department of Economics, University of Melbourne, Melbourne, Australia

Abstract

This paper presents the results from a minimum-effort game in which individuals can observe the choices of others in real time. We find that under perfect monitoring almost all groups coordinate at the payoff-dominant equilibrium. However, when individuals can only observe the actions of their immediate neighbors in a circle network, monitoring improves neither coordination nor efficiency relative to a baseline treatment without real-time monitoring. We argue that the inefficacy of imperfect monitoring is due to information uncertainty, that is, uncertainty about the correct interpretation of a neighbor's actions. Information uncertainty prevents individuals from inferring safely that their group has managed to coordinate from the available information.

Type
Original Paper
Copyright
Copyright © 2011 Economic Science Association

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