Discussion Paper

No. 2013-20 | March 01, 2013
Coordination in the El Farol Bar Problem: The Role of Social Preferences and Social Networks

Abstract

In this paper, the authors continue the pursuit of the self-coordination mechanism as studied in the El Farol Bar problem. However, in addition to efficiency (the optimal use of the public facility), they are also interested in the distribution of the public resources among all agents. Hence, they introduce a two-dimensional El Farol Bar problem, to be distinguished from the early one-dimensional one, which has efficiency as the only concern. The authors ask whether it is possible to have self-coordinating solutions to the El Farol Bar problem so that the public resources can be optimally used with neither idle capacity nor incurring congestion and, in the meantime, the resources can be well distributed among all agents. They consider this ideal situation an El Farol version of a "good society". This paper shows the existence of a positive answer to this inquiry, but it requires two elements, which were largely left out in the conventional literature on the El Farol Bar problem. These elements are social networks and social preferences. The authors first show, through cellular automata, that social networks can contribute to the emergence of a "good society". They then show that the addition of some inequity-averse agents can even guarantee the emergence of the "good society".

JEL Classification

B52 C63 C73

Cite As

Shu-Heng Chen and Umberto Gostoli (2013). Coordination in the El Farol Bar Problem: The Role of Social Preferences and Social Networks. Economics Discussion Papers, No 2013-20, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2013-20

Assessment



Comments and Questions


Anonymous - Review
April 08, 2013 - 09:11

The authors discussed the mechanism of self-coordination in repeated dispersion game. The main contribution of this paper is clarify the issue of efficiency and equity conditions in dispersion game.
Usually it may be impossible to satisfy these two conditions simultaneously.
The authors succeed to introduce some intentional behaviors such ...[more]

... as inequity-aversion and combing evolution in social networks, they show a collection of agents succeed to realize a good society from the view point of efficiency and equity.
This paper is remarkable and gives a new insight for the research for emerging social norm or coordination for utilizing limited resources.
But similar result has been already reported without including intentional intentional behaviors such as inequity-aversion.
I strongly recommend the author to refer to the following paper.

Akira Namatame and Noriko Fujii (Tanoura) "Collective Evolution of Turn-taking Norm in Repeated Dispersion Games"
,European Journal of Economic and Social Systems, vol.21, no.1, pp.81-105, 2008