Coordinating Collective Resistance through Communication and Repeated Interaction

1
Coordinating Collective Resistance through
Communication and Repeated Interaction

• Timothy N. Cason, Purdue Univ.
• Vai-Lam Mui, Monash Univ.

2
The Divide-and-Conquer CR Game
Subordinate B
Subord. A
Transgress against both
Subordinate B
Subord. A
Transgress against A
Leader
Transgress against B
(symmetric payoffs to matrix in subgame above)
Subordinate B
Not Transgress
Subord. A
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Transgression and Resistance

• What institutions and social mechanisms can
  constrain leaders who have incentives to exploit
  their power?
• A recent theme in political economy and
  organizational economics
• Coordination problem in collective resistance

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Transgression, Collective Resistance, and
Communication

• Multiple equilibria
• The outcome of no transgression against any
  subordinate can not be supported as part of a
  SPNE with purely self-interested agents
• The beneficiary subordinate, who receives some
  surplus when transgression occurs against the
  other, has a dominant strategy to acquiesce
• Communication should not change the fact that no
  transgression cannot be supported as an
  equilibrium
• However, if some beneficiaries are altruistic
  punishers, then some joint resistance can occur
  in the divide-and-conquer (DAC) subgame
• This also implies that (cheap talk) communication
  might facilitate coordination against
  transgression (Cason and Mui (2006) found support
  for this hypothesis)

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What about Repeated Interaction?

• Is repetition also effective in facilitating
  collective resistance in the absence of
  communication?
• Our previous results suggest that even finite
  repetition may help increase resistance and
  reduce transgression (type identification)
• Due to multiple SPNE in the stage game,
  cooperation among subordinates is an equilibrium
  even for (short) finite repetition
• Weingast (1997), citing the folk theorems,
  emphasizes infinite repetition
• Is repetition more effective than communication
  in facilitating collective resistance and
  deterring transgression?

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Experimental Design (468 Total subjects)
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Results Summary The Big Picture

• Repetition reduces the transgression rate, but
  communication (even with random matching) is at
  least as effective as the best form of repetition
• Communication, but not repetition, significantly
  increases the subordinates coordinated
  resistance
• Type identification of the other subordinate
  appears to be better facilitated through
  (restrictive) communication than repeated play

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No Transgression Rates
Communication
Random Matching, No Comm. Baseline
9
Rates of No Transgression Treatment
Averages Dropping Periods 1-20
Note Red arrows denote significant differences
at p-valuelt0.05 blue arrows denote significant
differences at p-valuelt0.10 (one-tailed
Mann-Whitney tests)
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No Transgression Rates Summary

• Repeated playparticularly repeated play over a
  long horizonreduces the rate that leaders
  transgress.
• Cheap talk, in the form of binary signals of
  intentions ex post, is just as effective as the
  best type of repeated play (Long Horizon) in
  reducing the transgression rate (Mann-Whitney
  U20, n8, m6 ns).
• Holding the matching protocol constant, adding
  cheap talk always reduces the transgression rate,
  although this effect is only marginally
  significant in the finite repetition treatments.
• The No Transgression rate exceeds 50 percent in
  the treatment with a long but finite horizon and
  cheap talk, compared to less than 10 percent in
  the baseline random matching treatment with no
  communication.

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Successful Joint Resistance Rates
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Successful Joint Resistance Rate Treatment
Averages Dropping Periods 1-20
Note Red arrows denote significant differences
at p-valuelt0.05 blue arrows denote significant
differences at p-valuelt0.10 (one-tailed
Mann-Whitney tests)
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Successful Joint Resistance Rates Summary

• Repeated play does not increase the rate of
  successful joint resistance to DAC transgression
  in the No Communication condition.
• Within the communication condition, only
  indefinite repetition increases the joint
  resistance to DAC rate, compared to
  communication/random matching.
• Communication increases the rate of successful
  joint resistance, compared to no communication
  and random matching baseline, for all matching
  treatments (random effects probit model highest
  p-valuelt0.01).

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Successful Joint Resistance Rate Treatment
AveragesDropping Periods 1-20
Note Red arrows denote significant differences
at p-valuelt0.05 blue arrows denote significant
differences at p-valuelt0.10 (one-tailed
Mann-Whitney tests)