Külpmann P, Khantadze D. Identifying the reasons for coordination failure in a laboratory experiment. Center for Mathematical Economics Working Papers. Vol 567. Bielefeld: Center for Mathematical Economics; 2016.We investigate the effect of absence of common knowledge on the outcomes of
coordination games in a laboratory experiment. Using cognitive types, we can
explain coordination failure in pure coordination games while differentiating between
coordination failure due to first- and higher-order beliefs.
In our experiment, around 76% of the subjects have chosen the payoff-dominant
equilibrium strategy despite the absence of common knowledge. However, 9%
of the players had first-order beliefs that lead to coordination failure and another
9% exhibited coordination failure due to higher-order beliefs. Furthermore, we
compare our results with predictions of commonly used models of higher-order
beliefs
