Normative Conflict and History Dependence in Repeated Coordination Games

We study equilibrium selection in indefinitely repeated coordination games with and without payoff asymmetries. In the symmetric games, repeated interactions make it possible to achieve outcomes that are both efficient and egalitarian. In the asymmetric games, however, equality is at odds with efficiency, giving rise to a normative conflict. We design an experiment where subjects play a series of repeated coordination games where the degree of payoff asymmetry is gradually changing, which allows us to investigate how experience in one game influences behavior in later games. The experimental results show that normative conflict makes it difficult to achieve coordination. Overall, players successfully achieve coordination in less than half of the cases in the presence of normative conflict: a majority of them coordinate on the equal payoff outcome or strike a compromise between equality and efficiency; very few coordinate on the efficient outcome. History is shown to play an important role in equilibrium selection. We find evidence that the use of a normative principle can spill over across different games, even if the strategies implementing this principle change