THREAT TO REGULATE AND COORDINATION FAILURES - EXPERIMENTAL-EVIDENCE

Coordination games can represent a wide range of issues in real estate . In this paper, we present the results of an experiment designed to i nvestigate the impact of regulatory threats in a coordination game. Th e experiment consisted of two sessions. The first session included a s imple coordination game. We found significant coordination failures am ong the players in this session. We then conducted a second session in which we introduced a new player who had the choice to either interve ne and regulate the payoffs of the other players or not to intervene a nd let the ether players' actions determine the outcome. Our objective was to test whether the introduction of such a regulatory authority w ould induce more cooperative play by the players and move the market t o the Pareto superior outcome. we found this not to he the case. ?here was no statistically significant difference between the choices of su bjects in the two sessions.