On Smiles, Winks, and Handshakes as Coordination Devices

In an experimental study we examine a variant of the ‘minimum effort game’, acoordination game with Pareto ranked equilibria, and risk considerations pointing to theleast efficient equilibrium. We focus on the question whether simple cues such as smiles,winks and handshakes could be recognised and employed by the players as a tell-tale signof each other's trustworthiness, thus enabling them to coordinate on the more risky but morerewarding Pareto efficient equilibrium. Our experimental results show that such cues mayindeed play a role as coordination devices as their information value is significant andsubstantial...