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Two notions of conventions: an experimental analysis

Published online by Cambridge University Press:  01 December 2008

LUIS M. MILLER
LUIS M. MILLER*
Affiliation:
Max Planck Institute of Economics, Jena, Germany
*
*Correspondence to: Strategic Interaction Group, Max Planck Institute of Economics, Kahlaische Straße 10, 07745 Jena, Germany. Email: [email protected]
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Abstract

This paper aims at analyzing the interaction between both economic and sociological notions of convention. To this end, it starts by distinguishing conceptually between specific convention, i.e. an arbitrary but stable social regularity, and general convention, i.e. a principle of action prescribing how to behave in a certain class of situations. A game theoretical framework to represent the interrelation between both concepts is then introduced. Finally, this relation is studied experimentally. The main results of the experiment are: (1) general conventions have to be commonly known and adopted among subjects in order to work as guides to coordinate on specific conventions; (2) once subjects follow a general convention they are highly consistent with it in a repeated environment; (3) efficiency concerns are focal in the class of games studied in this paper.

Type
Research Article
Information
Journal of Institutional Economics , Volume 4 , Issue 3 , December 2008 , pp. 327 - 349
Copyright
Copyright © The JOIE Foundation 2008

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