DP16683 Dynamic coordination in efficient and fair strategies: a developmental perspective

Author(s): Isabelle Brocas, Juan D Carrillo
Publication Date: October 2021
Keyword(s): coordination, developmental decision-making, repeated games
JEL(s): C73, C91
Programme Areas: Public Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=16683

We study in the laboratory the behavior of children and adolescents (ages 7 to 16) in two repeated coordination games, the stag hunt and battle of the sexes. Coordinating on the efficient and fair long run outcome (EFO) requires participants to share intentions and beliefs. This exercise is arguably complex in the battle of the sexes, as it requires taking turns between the two static Nash equilibria, hence coordinating the strategies. By contrast, in the stag hunt it only requires repeating the action that leads to the Pareto efficient outcome, hence coordinating the actions. We obtain four main findings. First, for both games, we show a significant and remarkably stable increase in the ability to coordinate on the EFO with age. Second, the majority of participants in all ages adhere to one of a small number of relatively simple strategies. Third, jointly profitable outcomes are more prevalent in the stag hunt than in the battle of the sexes. Last, behavior improves between the first and second supergame. This evidence suggests that we gradually learn how to share intentions and beliefs, an ability that we train rapidly and export to new interactions, but that is limited by game complexity.