Local Discouragement and Global Collapse: A Theory of Coordination Avalanches

S-Tier
Journal: American Economic Review
Year: 2001
Volume: 91
Issue: 1
Pages: 208-224

Score contribution per author:

4.022 = (α=2.01 / 2 authors) × 4.0x S-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We study a dynamic game in which all players initially possess the same information and coordinate on a high level of activity. Eventually, players with a long string of bad experiences become inactive. This prospect can cause a coordination avalanche in which all activity in the population stops. Coordination avalanches are part of Pareto-efficient equilibria; they can occur at any point in the game; their occurrence does not depend on the true state of nature; and allowing players to exchange information may merely hasten their onset. We present applications to search markets, organizational meltdown, and inefficient computer upgrades.

Technical Details

RePEc Handle
repec:aea:aecrev:v:91:y:2001:i:1:p:208-224
Journal Field
General
Author Count
2
Added to Database
2026-01-25