Games Real Actors Could Play

Abstract

There is more coordination in the modern world than is plausibly explained by the classical mechanisms of community, market, hierarchy and their commonly discussed variants. This paper explores modalities of non-market coordination whose application is not constrained by the narrow motivational and cognitive limitations of pure forms of hierarchical and negotiated coordination. The focus is on two varieties of negotiated self-coordination under conditions where actual negotiations are embedded in a pre-existing structural context - either within hierarchical organizations or within self-organizing networks of cooperative relationships. Extrapolating from empirical findings in a variety of settings, it is argued that embeddedness will, at the same time, increase the scope of welfare maximizing `positive coordination' and create conditions under which externalities are inhibited through `negative coordination'. In combination, these mechanisms are able to explain much of the de facto coordination that seems to exist beyond the confines of efficient markets and hierarchies.