Stand By Me. Experiments on Help and Commitment in Coordination Games

Abstract

Comunicación presentada en la CESifo Area Conference on Behavioural Economics, celebrada los días 25 y 26 de octubre de 2013 en Munich (Alemania)We present experiments studying how high ability individuals use help to foster efficient coordination. After an initial phase that traps groups in a low productivity equilibrium, incentives to coordinate are increased, making it possible to escape this performance trap. The design varies whether high ability individuals can offer help and, if so, whether they must commit to help for an extended period. If help is chosen on a round by round basis, the probability of escaping the performance trap is slightly reduced by allowing for help. The likelihood of success significantly improves if high ability individuals must commit to help for an extended time period. We develop and estimate a structural model of sophisticated learning that provides an explanation for why commitment is necessary. The key insight is that potential leaders who are overly optimistic about their ability to teach their followers are too fast to eliminate help in the absence of commitmentThe authors thank the NSF (SES-0214310), the Spanish Ministry of Science and Innovation and the Barcelona GSE Research Network for financial helpPeer Reviewe