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Abstract
The Lazarillo of Tormes’ picaresque novel introduces a story where two subjects sequentially extract (one, two or three) tokens from a common pool in an asymmetric information framework (the first player cannot observe her partners’ actions). By introducing a reward for both subjects in case that in every period at least one subject had taken one single token, we define an interesting coordination game. We conduct an experiment with 120 undergraduate students to study their behavior in this framework. We find that if the second player is allowed to take more tokens than her partner, then the frequency of cooperators does not seem to be affected by the informational asymmetry. Nevertheless, this asymmetry (i) incentives the second player to use her ‘power of extraction’ while the social externality is still available, (ii) yields to more asymmetric profit distributions when subjects win the social externality and (iii) delays the breach period in case of coordination failure. Furthermore, the first choice of the first player is determinant for getting the reward.
Highlights
There exist many different situations where if agents coordinate their actions according to a certain rule of sustainability they get a social externality
This is a key issue of our experiment since we focus on the reactions of the second player on the first player’s actions when her own actions can be hidden
Since we are interested in analyzing which asymmetry is more relevant, either the advantage of moving first or the larger capacity of extracting, we let the second player extract more tokens than the first player in every round
Summary
“ I want to be generous with you: we’ll share this bunch of grapes, and you can eat as many as I do. We applied a between-subjects design to investigate the impact of the informational asymmetry implied by the opacity/transparency of the decisions of first player (Type A) on the decisions of the second player (Type B) and its implications on the coordination/cooperation to win the reward and the final playoffs. For this purpose, we consider two treatments: Control treatment (CT): Both players can observe the decisions of their matched partners in each round.
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