Who Matters in Coordination Problems?
Sákovics, József, and
Jakub Steiner. 2012. "Who Matters in Coordination Problems?."
American Economic Review,
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. (JEL D81, D82, D83, O33)
Article Full-Text Access
Sákovics, József (U Edinburgh)
Steiner, Jakub (CERGE-EI, Prague and Northwestern U)
D81: Criteria for Decision-Making under Risk and Uncertainty
D82: Asymmetric and Private Information; Mechanism Design
D83: Search; Learning; Information and Knowledge; Communication; Belief
O33: Technological Change: Choices and Consequences; Diffusion Processes