Improving coordination and cooperation through competition

Abstract

Understanding how to improve coordination in a coordination game and why people cooperate in a prisoner's dilemma game are important aspects for both game theory and management. We design an experiment that shows that a competitive environment provides for improved coordination in the minimum-effort coordination game. Furthermore, agents are more likely to cooperate in the one-shot prisoner's dilemma game if they originate from a group with higher levels of coordination. The cooperation level depends on the coordination level of the group itself and not on the individual agent's strategy from the coordination game. Our experimental design provides an endogenous development of culture, defined by coordination and cooperation, and can help to explain widely studied questions such as the persistent performance differences among seemingly similar enterprises.