1 coordinating collective resistance through communication and repeated interaction timothy n....
TRANSCRIPT
1
Coordinating Collective Resistance through
Communication and Repeated Interaction
Timothy N. Cason, Purdue Univ.
Vai-Lam Mui, Monash Univ.
2
The Divide-and-Conquer CR Game
Acquiesce Challenge
Acquiesce 12, 2, 2 12, 2, 1
Challenge 12, 1, 2 0, 7, 7
Subordinate B
Subord. A
Leader
Transgressagainst both
Acquiesce Challenge
Acquiesce 6, 8, 8 6, 8, 7
Challenge 6, 7, 8 0, 7, 7
Subordinate B
Subord. A
NotTransgress
Acquiesce Challenge
Acquiesce 8, 2, 9 8, 2, 8
Challenge 8, 1, 9 0, 7, 7
Subordinate B
Subord. ATransgressagainst A
Transgressagainst B (symmetric payoffs to matrix in subgame above)
3
Transgression and Resistance
• What institutions and social mechanisms can constrain leaders who have incentives to exploit their power?– A recent theme in political economy and
organizational economics– Coordination problem in collective resistance
4
Transgression, Collective Resistance, and Communication
• Multiple equilibria• The outcome of no transgression against any subordinate
can not be supported as part of a SPNE with purely self-interested agents
• The “beneficiary” subordinate, who receives some surplus when transgression occurs against the other, has a dominant strategy to acquiesce
• Communication should not change the fact that no transgression cannot be supported as an equilibrium
• However, if some beneficiaries are altruistic punishers, then some joint resistance can occur in the divide-and-conquer (DAC) subgame
• This also implies that (cheap talk) communication might facilitate coordination against transgression (Cason and Mui (2006) found support for this hypothesis)
5
What about Repeated Interaction?
• Is repetition also effective in facilitating collective resistance in the absence of communication? – Our previous results suggest that even finite repetition may help
increase resistance and reduce transgression (type identification)– Due to multiple SPNE in the stage game, cooperation among
subordinates is an equilibrium even for (short) finite repetition– Weingast (1997), citing the folk theorems, emphasizes infinite
repetition
• Is repetition more effective than communication in facilitating collective resistance and deterring transgression?
6
Experimental Design(468 Total subjects)
Random Matching
Long Horizon Finite Repetition (50 periods)
Equivalent Horizon Finite Repetition(8 periods)
Indefinite Repetition(7/8 prob of continuation)
No Communication
8 Sessions (72 Subjects)6 at Monash Univ., 2 at Purdue Univ.
6 Sessions (54 Subjects)2 at Monash Univ., 4 at Purdue Univ.
6 Sessions (54 Subjects)2 at Monash Univ., 4 at Purdue Univ.
6 Sessions (54 Subjects)2 at Monash Univ., 4 at Purdue Univ.
Ex Post Communication
8 Sessions (72 Subjects)6 at Monash Univ., 2 at Purdue Univ.
6 Sessions (54 Subjects)2 at Monash Univ., 4 at Purdue Univ.
6 Sessions (54 Subjects)2 at Monash Univ., 4 at Purdue Univ.
6 Sessions (54 Subjects)2 at Monash Univ., 4 at Purdue Univ.
7
Results Summary: The Big Picture
• Repetition reduces the transgression rate, but communication (even with random matching) is at least as effective as the best form of repetition
• Communication, but not repetition, significantly increases the subordinates’ coordinated resistance
• Type identification of the other subordinate appears to be better facilitated through (restrictive) communication than repeated play
8
No Transgression Rates for All Treatments
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
1-10 11-20 21-30 31-40 41-50
Period Range
No
Tra
nsgr
essi
on R
ate
No Comm, Random Matching Ex Post Comm, Random MatchingNo Comm, Long Horizon Finite Ex Post Comm, Long Horizon FiniteNo Comm, Equivalent Horizon Finite Ex Post Comm, Equivalent Horizon FiniteNo Comm, Infinite Repetition Ex Post Comm, Infinite Repetition
No Transgression Rates
Communication
Random Matching,No Comm. Baseline
9
Rates of No Transgression Treatment Averages
Dropping Periods 1-20
Random Matching
Long Horizon Finite Repetition
Equivalent Horizon Finite Repetition
Indefinite Repetition
No Communication
7.5% 32.6% 20.2% 12.1%
Ex Post Communication
24.7% 55.7% 39.9% 46.8%
Note: Red arrows denote significant differences at p-value<0.05; blue arrows denotesignificant differences at p-value<0.10 (one-tailed Mann-Whitney tests)
10
No Transgression Rates: Summary• Repeated play—particularly repeated play over a long
horizon—reduces the rate that leaders transgress.
• Cheap talk, in the form of binary signals of intentions ex post, is just as effective as the best type of repeated play (Long Horizon) in reducing the transgression rate (Mann-Whitney U=20, n=8, m=6; ns).
• Holding the matching protocol constant, adding cheap talk always reduces the transgression rate, although this effect is only marginally significant in the finite repetition treatments.
• The No Transgression rate exceeds 50 percent in the treatment with a long but finite horizon and cheap talk, compared to less than 10 percent in the baseline random matching treatment with no communication.
11
Successful Joint Resistance Rates Against DAC Transgression for All Treatments
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
1-10 11-20 21-30 31-40 41-50
Period Range
No
Tra
nsgr
essi
on R
ate
No Comm, Random Matching Ex Post Comm, Random MatchingNo Comm, Long Horizon Finite Ex Post Comm, Long Horizon FiniteNo Comm, Equivalent Horizon Finite Ex Post Comm, Equivalent Horizon FiniteNo Comm, Infinite Repetition Ex Post Comm, Infinite Repetition
Successful Joint Resistance Rates
12
Random Matching
Long Horizon Finite Repetition
Equivalent Horizon Finite Repetition
Indefinite Repetition
No Communication
7.1% 14.0% 8.4% 9.5%
Ex Post Communication
14.8% 22.4% 16.0% 26.9%
Successful Joint Resistance Rate Treatment Averages
Dropping Periods 1-20
Note: Red arrows denote significant differences at p-value<0.05; blue arrows denotesignificant differences at p-value<0.10 (one-tailed Mann-Whitney tests)
13
Successful Joint Resistance Rates: Summary
• Repeated play does not increase the rate of successful joint resistance to DAC transgression in the No Communication condition.
• Within the communication condition, only indefinite repetition increases the joint resistance to DAC rate, compared to communication/random matching.
• Communication increases the rate of successful joint resistance, compared to no communication and random matching baseline, for all matching treatments (random effects probit model; highest p-value<0.01).
14
Successful Joint Resistance Rate Treatment Averages
Dropping Periods 1-20
Random Matching
Long Horizon Finite Repetition
Equivalent Horizon Finite Repetition
Indefinite Repetition
No Communication
7.1% 14.0% 8.4% 9.5%
Ex Post Communication
14.8% 22.4% 16.0% 26.9%
Note: Red arrows denote significant differences at p-value<0.05; blue arrows denotesignificant differences at p-value<0.10 (one-tailed Mann-Whitney tests)