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Leadership and Overcoming Coordination Failure with Asymmetric Costs

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  • Jordi Brandts
  • David J. Cooper
  • Enrique Fatas

Abstract

We study how the heterogeneity of agents affects the extent to which changes in financial incentives can pull a group out of a situation of coordination failure. We focus on the connections between cost asymmetries and leadership. Experimental subjects interact in groups of four in a series of weak-link games. The treatment variable is the distribution of high and low effort cost across subjects. We present data for one, two and three low-cost subjects as well as control sessions with symmetric costs. The overall pattern of coordination improvement is common across treatments. Early coordination improvements depend on the distribution of high and low effort costs across subjects, but these differences disappear with time. We find that initial leadership in overcoming coordination failure is not driven by low-cost subjects but by subjects with the most frequent cost. This conformity effect can be due to a kind of group identity or to the cognitive simplicity of acting with identical others.

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Bibliographic Info

Paper provided by Barcelona Graduate School of Economics in its series Working Papers with number 298.

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Date of creation: May 2006
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Handle: RePEc:bge:wpaper:298

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Keywords: Experiments; Coordination; Organizational change; Heterogeneous agents; Leadership;

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References

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  1. Enrique Fatas & Tibor Neugebauer & Javier Perote, 2006. "Within-Team Competition In The Minimum Effort Coordination Game," Pacific Economic Review, Wiley Blackwell, vol. 11(2), pages 247-266, 06.
  2. Jordi Brandts & David J. Cooper, 2004. "A Change Would Do You Good... An Experimental Study on How to Overcome Coordination Failure in Organizations," Working Papers 115, Barcelona Graduate School of Economics.
  3. Gary Bornstein & Uri Gneezy & Rosemarie Nagel, 1999. "The effect of intergroup competition on group coordination: An experimental study," Economics Working Papers 393, Department of Economics and Business, Universitat Pompeu Fabra.
  4. J. B. Van Huyck & R. C. Battalio & R. O. Beil, 2010. "Tacit coordination games, strategic uncertainty, and coordination failure," Levine's Working Paper Archive 661465000000000393, David K. Levine.
  5. Camerer, Colin F. & Knez, Marc & Weber, Roberto A., 1996. "Timing and Virtual Observability in Ultimatum Bargaining and Weak Link Coordination Games," Working Papers 970, California Institute of Technology, Division of the Humanities and Social Sciences.
  6. David Cooper & John H. Kagel, 2003. "Lessons Learned: Generalizing Learning Across Games," American Economic Review, American Economic Association, vol. 93(2), pages 202-207, May.
  7. Jordi Brandts & David J. Cooper, 2007. "It's What You Say, Not What You Pay: An Experimental Study of Manager–Employee Relationships in Overcoming Coordination Failure," Journal of the European Economic Association, MIT Press, vol. 5(6), pages 1223-1268, December.
  8. Blume, Andreas & Ortmann, Andreas, 2007. "The effects of costless pre-play communication: Experimental evidence from games with Pareto-ranked equilibria," Journal of Economic Theory, Elsevier, vol. 132(1), pages 274-290, January.
  9. Knez, Marc & Camerer, Colin, 2000. "Increasing Cooperation in Prisoner's Dilemmas by Establishing a Precedent of Efficiency in Coordination Games," Organizational Behavior and Human Decision Processes, Elsevier, vol. 82(2), pages 194-216, July.
  10. Roberto A. Weber, 2006. "Managing Growth to Achieve Efficient Coordination in Large Groups," American Economic Review, American Economic Association, vol. 96(1), pages 114-126, March.
  11. Weber, Roberto & Camerer, Colin F. & Knez, Marc, 1996. "The Illusion of Leadership," Working Papers 992, California Institute of Technology, Division of the Humanities and Social Sciences.
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Citations

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Cited by:
  1. Kyle Hyndman & Antoine Terracol & Jonathan Vaksmann, 2009. "Learning and sophistication in coordination games," Experimental Economics, Springer, vol. 12(4), pages 450-472, December.
  2. Riedl Arno & Rohde Ingrid M.T. & Strobel Martin, 2011. "Efficient Coordination in Weakest-Link Games," Research Memorandum 057, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  3. Stefania Bortolotti & Giovanna Devetag & Andreas Ortmann, 2009. "Exploring the effects of real effort in a weak-link experiment," CEEL Working Papers 0901, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
  4. Gürerk, Özgür & Irlenbusch, Bernd & Rockenbach, Bettina, 2009. "Motivating teammates: The leader's choice between positive and negative incentives," Journal of Economic Psychology, Elsevier, vol. 30(4), pages 591-607, August.
  5. Julie Beugnot & Zeynep Gürgüç & Frederik Roose Øvlisen & Michael M. W. Roos, 2012. "Coordination failure caused by sunspots," Economics Bulletin, AccessEcon, vol. 32(4), pages 2860-2869.
  6. Sarah Jacobson & Jason Delaney, 2012. "The Good of the Few: Reciprocity in the Provision of a Public Bad," Department of Economics Working Papers 2012-02, Department of Economics, Williams College.
  7. Omar Al-Ubaydli & Garett Jones & Jaap Weel, 2011. "Patience, Cognitive Skill and Coordination in the Repeated Stag Hunt," Working Papers 1024, George Mason University, Interdisciplinary Center for Economic Science.
  8. Donna Harris & Klaus Abbink, 2012. "In-group favouritism and out-group discimination in naturally occurring groups," Economics Series Working Papers 616, University of Oxford, Department of Economics.
  9. Heijden, E.C.M. van der & Moxnes, E., 2011. "Leading by Example to Protect the Environment; Do the Costs of Leading Matter?," Discussion Paper 2011-043, Tilburg University, Center for Economic Research.
  10. Rachel Croson & Enrique Fatas & Tibor Neugebauer, 2006. "An Experimental Analysis Of Conditional Cooperation," Working Papers. Serie AD 2006-24, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  11. Philip J. Grossman & Mana Komai & James E. Jensen, 2012. "Leadership and Gender in Groups: An Experiment," Development Research Unit Working Paper Series 42-12, Monash University, Department of Economics.
  12. Ioannou, Christos A. & Makris, Miltiadis, 2014. "An Experimental Study Of Uncertainty In Coordination Games," Discussion Paper Series In Economics And Econometrics 1401, Economics Division, School of Social Sciences, University of Southampton.
  13. Boris van Leeuwen & Theo Offerman & Arthur Schram, 2013. "Superstars need Social Benefits: An Experiment on Network Formation," Tinbergen Institute Discussion Papers 13-112/I, Tinbergen Institute.
  14. Seyed Komail Tayebi & Ahmad Googerdchian, 2007. "A Difference-in-Differences (DID) Analysis of Financial Integration and International Trade in ASEAN+5," Iranian Economic Review, Economics faculty of Tehran university, vol. 12(3), pages 109-126, fall & wi.
  15. Chong, Sophia & Guillen, Pablo, 2012. "The discreet charm of the collective contract," Working Papers 2012-03, University of Sydney, School of Economics.

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