This paper presents the results from a minimum-effort game in which individuals can observe the choices of others in real time. We find that under perfect monitoring almost all groups coordinate at the payoff-dominant equilibrium. However, when individuals can only observe the actions of their immediate neighbors in a circle network, monitoring improves neither coordination nor efficiency relative to a baseline treatment without real-time monitoring. We argue that the inefficiency of imperfect monitoring is due to information uncertainty, that is, uncertainty about the interpretation of the information available regarding the actions of others.
Deck, C. and Nikiforakis, N. (2010). Perfect and imperfect real-time monitoring in a minimum-effort game. ESI Working Paper 10-14. Retrieved from http://digitalcommons.chapman.edu/esi_working_papers/117
Working Paper 10-14