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.

Original languageEnglish (US)
Pages (from-to)71-88
Number of pages18
JournalExperimental Economics
Volume15
Issue number1
DOIs
StatePublished - Mar 2012

Keywords

  • Cheap talk
  • Circle network
  • Imperfect monitoring
  • Information uncertainty
  • Real-time monitoring

ASJC Scopus subject areas

  • Economics, Econometrics and Finance (miscellaneous)

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