Who Matters in Coordination Problems?

Jozsef Sakovics, Jakub Steiner

Research output: Contribution to journalArticlepeer-review

Abstract

Agents face a coordination problem akin to the adoption of a network technology. A principal announces investment subsidies that, at minimal cost, attain a given likelihood of successful coordination. Optimal subsidies target agents who impose high externalities on others and on whom others impose low externalities. Based on the analysis of the role of strategic uncertainty in coordination processes, we provide a methodology that can be used to find the optimal targets for a variety of interventions in a large class of coordination problems with heterogeneous agents.
Original languageEnglish
Pages (from-to)3439-3461
Number of pages23
JournalAmerican Economic Review
Volume102
Issue number7
DOIs
Publication statusPublished - Dec 2012

Keywords

  • JEL D81
  • JEL D82
  • JEL D83
  • JEL O33
  • Criteria for Decision-Making under Risk and Uncertainty
  • Asymmetric and Private Information
  • Mechanism Design
  • Search
  • Learning
  • Information and Knowledge
  • Communication
  • Belief
  • Technological Change
  • Choices and Consequences
  • Diffusion Processes

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