The differential impact of friendship on cooperative and competitive coordination
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The differential impact of friendship on cooperative and competitive coordination Gabriele Chierchia1,2 • Fabio Tufano3
•
Giorgio Coricelli2,4
Ó The Author(s) 2020
Abstract Friendship is commonly assumed to reduce strategic uncertainty and enhance tacit coordination. However, this assumption has never been tested across two opposite poles of coordination involving either strategic complementarity or substitutability. We had participants interact with friends or strangers in two classic coordination games: the stag-hunt game, which exhibits strategic complementarity and may foster ‘‘cooperation’’, and the entry game, which exhibits strategic substitutability and may foster ‘‘competition’’. Both games capture a frequent trade-off between a potentially high paying but uncertain option and a low paying but safe alternative. We find that, relative to strangers, friends are more likely to choose options involving uncertainty in stag-hunt games, but the opposite is true in entry games. Furthermore, in stag-hunt games, friends ‘‘tremble’’ less between options, coordinate better and earn more, but these advantages are largely decreased or lost in entry games. We further investigate how these effects are modulated by risk attitudes, friendship qualities, and interpersonal similarities. Keywords Coordination Entry game Friendship Strategic complementarity Strategic substitutability Stag-hunt game Strategic uncertainty
& Fabio Tufano [email protected] 1
Institute of Cognitive Neuroscience, University College London, London, UK
2
Center for Mind/Brain Science, University of Trento, Trento, Italy
3
School of Economics, University of Nottingham, Sir Clive Granger Building, University Park, Nottingham NG7 2RD, UK
4
Department of Economics, University of Southern California, Los Angeles, USA
123
G. Chierchia et al.
1 Introduction Coordination problems arise widely in social and economic contexts: from teams in the workplace (e.g., Lazear and Shaw 2007) to organizations (e.g., Milgrom and Roberts 1992); from collective actions (e.g., Chwe 2013) to macroeconomics (e.g., Cooper and John 1988). From a game-theoretic perspective, coordination problems are characterised by multiplicity of Nash equilibria. As such, they pose a problem of equilibrium selection, which has been suggested to constitute ‘‘the most difficult problem in game theory’’ (Camerer 2003, p. 336). Most of the experimental research to date on equilibrium selection in coordination games has focused on how structural features (e.g., payoffs) of coordination games affect equilibrium selection and, consequently, the potential of social closeness as a coordination devise has remained largely unexplored (e.g., Camerer 2003; Devetag and Ortmann 2006). Economics has traditionally assumed a parsimonious ‘‘social void’’ of homogeneous individuals (Charness et al. 2007a, b),1 whereas other social sciences tend to explain social behaviour by assuming that individuals are heterogeneous along various
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