Communication and Coordination in Games with Third-Party Externalities | Henry Bradley

Decision-makers in coordination problems often impose negative externalities on non-decision-making third parties. This thesis investigates whether the introduction of pre-play communication in such coordination problems can work to alleviate such negative externalities, consequently increasing group welfare. Unlike previous studies, we find no significant effect following the introduction of communication in this laboratory experiment. Further, there is no evidence to suggest that communication opportunities heighten social image concerns. Such social image concerns might act as a mechanism to induce socially efficient behavior and alleviate negative externalities. A small subject pool and the nature of the communication technology employed are important factors to consider when interpreting the results.

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