Abstract
We test the effect of information transparency on the probability of coordination failure in games with finite signals. Prior theory has shown that the effect of information transparency is ambiguous. Our study is based on two insights. Where signal space is finite, increased transparency usually destroys uniqueness of equilibria; and increasing transparency can reverse the risk-dominance ordering of equilibria. Our experiments show that increasing transparency improves coordination only when transparency makes the efficient equilibrium risk dominant. Coordination is degraded when increased transparency causes the secure equilibrium to be risk dominant. These results are consistent with subjects holding level-1 beliefs.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
