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

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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.

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Authors and Affiliations

  1. Department of Economics, Walton College of Business, University of Arkansas, Fayetteville, USA

    Cary Deck

  2. Department of Economics, University of Melbourne, Melbourne, Australia

    Nikos Nikiforakis

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  1. Cary Deck
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  2. Nikos Nikiforakis
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Correspondence to Nikos Nikiforakis.

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Deck, C., Nikiforakis, N. Perfect and imperfect real-time monitoring in a minimum-effort game. Exp Econ 15, 71–88 (2012). https://doi.org/10.1007/s10683-011-9289-1

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  • DOI: https://doi.org/10.1007/s10683-011-9289-1

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