The Coordination Problem

The coordination problem occurs when individuals or groups need to work together effectively, but face challenges in aligning their actions or decisions. It arises because each party’s best choice depends on what others do, creating uncertainty and potential conflicts. For example, in traffic, drivers must coordinate by following rules to avoid accidents; if everyone acts independently, chaos ensues. In broader contexts, coordination problems can slow down or prevent optimal outcomes, requiring communication, trust, or institutions to facilitate synchronized actions. Essentially, it’s about organizing independent decisions so they work well together toward a common goal.