You better play 7: mutual versus common knowledge of advice in a weak-link experiment

This paper presents the results of an experiment on mutual versuscommon knowledge of advice in a two-player weak-link game with random match-ing. Our experimental subjects play in pairs for thirteen rounds. After a brief learningphasecommontoalltreatments,wevarytheknowledgelevelsassociatedwithexternaladvice given in the form of a suggestion to pick the strategy supporting the payoff-dominant equilibrium. Our results are somewhat surprising and can be summarized asfollows: in all our treatments both the choice of the efficiency-inducing action and thepercentageofefficientequilibriumplayarehigherwithrespecttothecontroltreatment,revealing that even a condition as weak as mutual knowledge of level 1 is sufficientto significantly increase the salience of the efficient equilibrium with respect to theabsence of advice. Furthermore, and contrary to our hypothesis, mutual knowledgeof level 2 induces, under suitable conditions, successful coordination more frequentlythan common knowledge