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Testing for the emergence of spontaneous order

Published online by Cambridge University Press:  14 March 2025

Konstantinos Georgalos*
Affiliation:
Department of Economics, Lancaster University Management School, LA1 4YX Lancaster, U.K.
John Hey
Affiliation:
Department of Economics, University of York, YO10 5DD Heslington, York, U.K.
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Abstract

We report on an experimental investigation of the emergence of Spontaneous Order, the idea that societies can co-ordinate, without government intervention, on a form of society that is good for its citizens, as described by Adam Smith. Our experimental design is based on a production game with a convex input provision possibility frontier, where subjects have to choose a point on this frontier. We start with a simple society consisting of just two people, two inputs, one final good and in which the production process exhibits returns to specialisation. We then study more complex societies by increasing the size of the society (groups of 6 and 9 subjects) and the number of inputs (6 and 9 inputs respectively), as well as the combinations of inputs that each subject can provide. This form of production can be characterised as a cooperative game, where the Nash equilibrium predicts that the optimal outcome is achieved when each member of this society specialises in the provision of a single input. Based on this framework, we investigate whether Spontaneous Order can emerge, without it being imposed by the government. We find strong evidence in favour of the emergence of Spontaneous Order, with communication being an important factor. Using text classification algorithms (Multinomial Naive Bayes) we quantitatively analyse the available chat data and we provide insight into the kind of communication that fosters specialisation in the absence of external involvement. We note that, while communication has been shown to foster coordination in other contexts (for example, in public goods games, market entry games and competitive coordination games) this contribution is in the context of a production game where specialisation is crucial.

Information

Type
Original Paper
Creative Commons
Creative Common License - CCCreative Common License - BY
This is an Open Access article, distributed under the terms of the Creative Commons Attribution (CC-BY) license (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted re-use, distribution, and reproduction in any medium, provided the original work is properly cited.
Copyright
Copyright © The Author(s) 2019
Figure 0

Fig. 1 An input provision possibility frontier

Figure 1

Table 1 The sequence of decisions and consequences

Figure 2

Table 2 Consequences if both workers specialise in the provision of one input

Figure 3

Table 3 Consequences if both workers provide equal quantities of the two inputs

Figure 4

Table 4 Number of independent observations by treatment and communication

Figure 5

Fig. 2 The aggregate supply of inputs over the various treatments

Figure 6

Table 5 Communication effects

Figure 7

Table 6 Treatment effects

Figure 8

Table 7 All effects

Figure 9

Table 8 Relative frequency of classified messages

Supplementary material: File

Georgalos and Hey supplementary material

Appendices A and B
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