This paper reports an experiment designed to detect the influence of strategic uncertainty on behavior in order statistic coordination games, which arise when a player's best response is an order statistic of the cohort's action combination. Unlike previous experiments using order statistic coordination games, the new experiment holds the payoff function constant and only changes cohort size and order statistic.

We perform an experiment on a pure coordination game with uncertainty about the payoffs. Our game is closely related to models that have been used in many macroeconomic and financial applications to solve problems of equilibrium indeterminacy. In our experiment, each subject receives a noisy signal about the true payoffs. This game (inspired by the “global” games of Carlsson and van Damme, Econometrica, 61, 989-1018, 1993) has a unique strategy profile that survives the iterative deletion of strictly dominated strategies (thus a unique Nash equilibrium). The equilibrium outcome coincides, on average, with the risk-dominant equilibrium outcome of the underlying coordination game. In the baseline game, the behavior of the subjects converges to the theoretical prediction after enough experience has been gained. The data (and the comments) suggest that this behavior can be explained by learning. To test this hypothesis, we use a different game with incomplete information, related to a complete information game where learning and prior experiments suggest a different behavior. Indeed, in the second treatment, the behavior did not converge to equilibrium within 50 periods in some of the sessions. We also run both games under complete information. The results are sufficiently similar between complete and incomplete information to suggest that risk-dominance is also an important part of the explanation.

Laboratory experiments are used to evaluate the extent to which players in games can coordinate investments that diminish the probability of losses due to security breaches or terrorist attacks. In this environment, economically sensible investments may be foregone if their potential benefits are negated by failures to invest in security at other sites. The result is a coordination game with a desirable high- payoff, high-security equilibrium and an undesirable low-security equilibrium that may result if players do not expect others to invest in security. One unique feature of this coordination situation is that investment in security by one player generates a positive externality such that all other players’ expected payoffs are increased, regardless of those other players’ investment decisions. Coordination failures are pervasive in a baseline experiment with simultaneous decisions, but coordination is improved if players are allowed to move in an endogenously determined sequence. In addition, coordinated security investments are observed more often when the largest single security threat to individuals is preventable by their own decisions to invest in security. The security coordination game is a “potential game,” and the success of coordination on the more secure equilibrium is related to the notion of potential function maximization and basin of attraction.

This paper presents a laboratory collective resistance (CR) game to study how different forms of non-binding communication among responders can help coordinate their collective resistance against a leader who transgresses against them. Contrary to the predictions of analysis based on purely self-regarding preferences, we find that non-binding communication about intended resistance increases the incidence of no transgression even in the one-shot laboratory CR game. In particular, we find that the incidence of no transgression increases from 7 percent with no communication up to 25-37 percent depending on whether communication occurs before or after the leader's transgression decision. Responders’ messages are different when the leaders can observe them, and the leaders use the observed messages to target specific responders for transgression.

We study how the heterogeneity of agents affects the extent to which changes in financial incentives can pull a group out of a situation of coordination failure. We focus on the connections between cost asymmetries and leadership. Experimental subjects interact in groups of four in a series of weak-link games. The treatment variable is the distribution of high and low effort cost across subjects. We present data for one, two and three low-cost subjects as well as control sessions with symmetric costs. The overall pattern of coordination improvement is common across treatments. Early coordination improvements depend on the distribution of high and low effort costs across subjects, but these differences disappear with time. We find that initial leadership in overcoming coordination failure is not driven by low-cost subjects but by subjects with the most common cost type. This conformity effect may be due to a kind of group identity or to the cognitive simplicity of acting with identical others.

Coordinating activity among members is an important problem faced by organizations. When firms, or units within firms, are stuck in bad equilibria, managers may turn to the temporary use of simple incentives—flat punishments or rewards—in an attempt to transition the firm or unit to a more efficient equilibrium. We investigate the use of incentives in the context of the “minimum-effort,” or “weak-link,” coordination game. We allow groups to reach the inefficient equilibrium and then implement temporary, flat, “all-or-none” incentives to encourage coordination on more efficient equilibria. We vary whether incentives are positive (rewards) or negative (penalties), whether they have substantial or nominal monetary value, and whether they are targeted to a specific outcome (the efficient equilibrium) or untargeted (apply to more than one outcome). Overall, incentives of all kinds are effective at improving coordination while they are in place, but there is little long-term persistent benefit of incentives—once incentives are removed, groups tend to return to the inefficient outcome. We find some differences between different kinds of incentives. Finally, we contrast our results to other recent work demonstrating greater long-term effectiveness of temporary incentives.

We analyze a class of coordination games in which the Kth player to submit an entry wins a contest. These games have an infinite number of symmetric equilibria and the set of equilibria does not change with K. We run experiments with 15 participants and with K = 3, 7, and 11. Our experiments show that the value of K affects initial submissions and convergence to equilibrium. When K is small relative to the number of participants, our experiments show that repeated play converges to or near zero. When K is large, an equilibrium is often not reached as a result of repeated play. We seek explanations to these patterns in hierarchical thinking and direction learning.

We report the results of experiments designed to test the impact of social status on learning in a coordination game. In the experiment, all subjects observe the play of an agent who either has high status or low status. In one treatment the agent is another player in the game; in the other the agent is a simulated player. Status is assigned within the experiment based on answers to a trivia quiz. The coordination game has two equilibria: one is payoff-dominant but risky, and the other is risk-dominant. The latter is most commonly chosen in experiments where there is no coordination device. We find that a commonly observed agent enhances coordination on the payoff-dominant equilibrium more often when the agent has high status.

Coordination games with Pareto-ranked equilibria have attracted major attention over the past two decades. Two early path-breaking sets of experimental studies were widely interpreted as suggesting that coordination failure is a common phenomenon in the laboratory. We identify the major determinants that seem to affect the incidence, and/or emergence, of coordination failure in the lab and review critically the existing experimental studies on coordination games with Pareto-ranked equilibria since that early evidence emerged. We conclude that there are many ways to engineer coordination successes.