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Coordination and learning in dynamic global games: experimental evidence

Published online by Cambridge University Press:  14 March 2025

Olga Shurchkov
Olga Shurchkov*
Affiliation:
Department of Economics, Wellesley College, 106 Central St. Wellesley, MA, USA
*
e-mail: oshurchk@wellesley.edu
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Abstract

Coordination problems are ubiquitous in social and economic life. Political mass demonstrations, the decision whether to join a speculative currency attack, investment in a risky venture, and capital flight from a particular country are all characterized by coordination problems. Furthermore, all these events have a dynamic nature which has been largely omitted from previous experimental studies. Here I use a two-stage variant of a dynamic global game to study experimentally how the arrival of information in a dynamic setting affects the relative aggressiveness of speculators. In the first stage, subjects exhibit excess aggressiveness, which appears to be driven by beliefs about others’ actions rather than an intrinsic taste for attacking. However, following a failed first-stage attack, subjects learn to be less aggressive in the second stage. On the other hand, the arrival of new, more precise information after a failed attack leads to an increase in subjects’ aggressiveness. Beliefs, again, play a crucial role in explaining how the arrival of information affects attacking behavior.

Keywords

CoordinationLearningDynamicsGlobal gamesCrisesBeliefsExcess aggressivenessExperimental economics

JEL classification

C7: Game Theory and Bargaining TheoryD8: Information, Knowledge, and UncertaintyC9: Design of ExperimentsF3: International Finance

Information

Type
Original Paper
Information
Experimental Economics , Volume 16 , Issue 3 , September 2013, pp. 313 - 334
Copyright
Copyright © 2012 Economic Science Association

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Footnotes

I am especially grateful to George-Marios Angeletos and Ernst Fehr for their invaluable insights and support throughout this project. Casey Rothschild has offered a tremendous level of guidance in the analysis and application of the theory. In addition, I would like to thank Ernst Fehr and the University of Zurich for providing the resources and the financial support without which this study would not be possible. I would also like to thank Daron Acemoglu, Miriam Bruhn, James Costain, Florian Ederer, Muhamet Yildiz, Akila Weerapana, and the seminar participants and organizers of the MIT macroeconomics workshop, Wellesley College Calderwood seminar, the IESE Conference on Complementarities and Information, the 2007 SAET conference, the conference of the French Economic Association on Behavioral Economics and Experiments, the ESA World Meeting 2007, and the 22nd World Congress of the EEA for valuable comments and discussion. All remaining errors are my own.

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