The formation of social conventions in real- Time environments

Abstract

Why are some behaviors governed by strong social conventions while others are not? We experimentally investigate two factors contributing to the formation of conventions in a game of impure coordination: The continuity of interaction within each round of play (simultaneous vs. real-time) and the stakes of the interaction (high vs. low differences between payoffs). To maximize efficiency and fairness in this game, players must coordinate on one of two equally advantageous equilibria. In agreement with other studies manipulating continuity of interaction, we find that players who were allowed to interact continuously within rounds achieved outcomes with greater efficiency and fairness than players who were forced to make simultaneous decisions. However, the stability of equilibria in the real-time condition varied systematically and dramatically with stakes: players converged on more stable patterns of behavior when stakes are high. To account for this result, we present a novel analysis of the dynamics of continuous interaction and signaling within rounds.We discuss this previously unconsidered interaction between within-trial and across-trial dynamics as a form of social canalization. When stakes are low in a real-time environment, players can satisfactorily coordinate 'on the fly', but when stakes are high there is increased pressure to establish and adhere to shared expectations that persist across rounds.