Coordinated Cooperation: The Effect of Network Structure on Coordination with Costly Actions

Coordination and cooperation are often required for satisfactory solutions to political problems. Two factors that affect the ability of groups to resolve these social dilemmas are the information actors have about other’s actions and the costs of taking an action. We utilize a network approach to model the structure of communication between actors and test experimentally how the communication structure affects coordination when actions are costly. We find that the addition of costs causes a significant increase in the amount of time it takes for coordination to occur and that costs cause players to change the strategy they use to resolve the coordination dilemma. Furthermore, the effect of increased costs is not constant across the various network structures. It appears that both more edges (communication) and higher degree variance (leadership) can attenuate the effect of costs to take an action. These results suggest that when designing or studying institutions we will want to account for the communication structures created by the institutions and how this structure may affect coordination and cooperation. 1 This material is based in part upon work supported by the National Science Foundation under Grant Number 0905645. Any opinions, findings, and conclusions or recommendations expressed in this material are those of the author(s) and do not necessarily reflect the views of the National Science Foundation. Coordination is an important aspect of many interesting social, political and economic situations. At the most basic level coordination occurs anytime there is a situation in which multiple equilbria are possible and players must come to agreement about which action to take. Therefore, nearly all allocation tasks, policy solutions, adoptions of new technologies, and social dilemmas feature coordination as an element because there exist multiple possible solutions to such problems. 2 At the same time, in almost all social settings it is costly to change one’s action and therefore coordination requires actors to be willing to pay the cost to change their action to achieve coordination. In this paper we study how the structure of information affects coordination when taking an action is costly. We first discuss how we model the information environment in which actors make choices and show why a network model provides important advantages in modeling information structure. Second, we discuss how adding a cost to take an action to a standard coordination game adds an element of cooperation to the game making it a richer, more interesting situation to study. We then turn to our predictions about how information structure (i.e. the network) affects costly coordination. After our predictions we present our experimental setup and then the results of a large number of behavioral experiments to investigate the 2 A great many situations feature multiple equilibira and therefore require coordination to reach a solution. For example, solutions to collective action problems (Ostrom 1990); electoral politics (Cox 1997); economic development and rule of law (Greif et al. 1994); social leadership (Calvert 1992); political participation (McClurg 2003); which side of the road we should drive on (Lewis 1969); and ending footbinding (Mackie 1996) all have multiple equilibria and achieving any one of them requires coordination. In all of these cases at least some actors must pay a cost for the coordinated outcome to occur. interaction of costs and network structure on coordination. Finally, we conclude by discussing how these results may help inform the design of the institutions that influence communication structures. Networks and the structure of communication One of the key factors that determines the success or failure of decentralized coordination is communication between actors so that they can each learn what the others have done. Much of the prior work has utilized one of the following three models of communication for settings in which there are more than two actors: 1. No communication or simultaneous decision making (Schelling’s idea of a focal point fits here) 2. If an individual chooses to make a statement she will be heard by everyone or anyone who decides to listen (Wilson and Rhodes 1997; Boudreau, McCubbins, Rodriguez and Weller 2010) 3. There is a signal sent to all actors about others’ beliefs or actions, usually some form of heuristic or compressed signal of all others’ choices (DeGroot 1974) These three models have been very useful in identifying the effect of information on decentralized coordination. Prior work in this vein has demonstrated that costs to communicate can impede coordination (McCubbins et al. 2010); having a group leader can improve 3 Dozens of studies have focused on the factors that influence coordination. A good overview of economic experiments on coordination appears in Camerer (2003). Generally, prior work finds that both greater communication between actors and focal points (of many types) are useful for