We model the structure of a firm or an organization as a network and consider minimum-effort games played on this network as a metaphor for cooperations failing due to coordination failures. For a family of behavioral rules, including Imitate the Best and the Proportional Imitation Rule, we show

therefore think of depression as being a state of coordination failure; a state in which market forces have failed to coordinate the millions of transactors that interact daily through a web of interconnected markets. What Smith called the ‘invisible hand, ’ or Mummery and Hobson (disparagingly) called

to small differences in initial conditions as predicted. The experiment provides some striking examples of coordination failure growing from small historical accidents. Key Words: adaptive learning, fictitious play, path dependence, coordination failure, predictive success. JEL classification: c720, c920

We analyze allocation of foreign aid to different sectors in a re-cipient developing country. Donors tend to favor social sectors over other public expenditure programs. Due to incomplete information coordination failure occurs. The donors may concentrate too much on the priority sectors leaving

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failure. Under plausible conditions, the parties will coordinate in the more inefficient but less risky equilibrium, that is, in the risk−dominant equilibrium in the sense of Harsanyi and Selten (1988).

This paper extends the literature on equilibria with coordination failures to arbitrary con-vex sets of admissible prices. This makes it possible to address coordination failures for cases with price indexation or more general price linkages between commodities. We in-troduce a new equilibrium

This paper examines whether a principal with limited knowledge of agents ’ actions can use an income tax scheme to uniquely implement the Pareto optimal equilibrium in a coordination game (i.e. a game with multiple Pareto-ranked equilibria). We show that, in contrast to games with externalities

as to an understanding of the role of public policy in the face of private coordination failures.

that might lead communities to Pareto-superior states among multiple potential equilibria. It is generally accepted that such multiplicity stems fundamentally from the presence of positive agglomeration externalities. We examine a two-sector model in this class, and look for intertemporal perfect foresight equilibria. It turns out that under some plausible conditions, positive externalities must coexist with external diseconomies elsewhere in the model, for there to exist equilibria that break free of historical initial conditions. Our main distinguishing assumption is that the positive agglomeration externalities appear with a time lag (that can be made vanishingly small). Then, in the absence of external diseconomies elsewhere, the long-run behaviour of the economy resembles that predicted by myopic adjustment. This finding is independent of the degree of forward-looking behavior exhibited by the agents.