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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. Bornstein, Gary & Gneezy, Uri & Nagel, Rosmarie, 2002. "The effect of intergroup competition on group coordination: an experimental study," Games and Economic Behavior, Elsevier, Elsevier, vol. 41(1), pages 1-25, October.
  2. Roberto A. Weber, 2006. "Managing Growth to Achieve Efficient Coordination in Large Groups," American Economic Review, American Economic Association, American Economic Association, vol. 96(1), pages 114-126, March.
  3. 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, Elsevier, vol. 132(1), pages 274-290, January.
  4. Jordi Brandts & David J. Cooper, 2006. "A Change Would Do You Good .... An Experimental Study on How to Overcome Coordination Failure in Organizations," American Economic Review, American Economic Association, American Economic Association, vol. 96(3), pages 669-693, June.
  5. 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, Elsevier, vol. 82(2), pages 194-216, July.
  6. Van Huyck, John B & Battalio, Raymond C & Beil, Richard O, 1990. "Tacit Coordination Games, Strategic Uncertainty, and Coordination Failure," American Economic Review, American Economic Association, American Economic Association, vol. 80(1), pages 234-48, March.
  7. Weber, Roberto & Camerer, Colin F. & Knez, Marc, 1996. "The Illusion of Leadership," Working Papers, California Institute of Technology, Division of the Humanities and Social Sciences 992, California Institute of Technology, Division of the Humanities and Social Sciences.
  8. Camerer, Colin F. & Knez, Marc & Weber, Roberto A., 1996. "Timing and Virtual Observability in Ultimatum Bargaining and Weak Link Coordination Games," Working Papers, California Institute of Technology, Division of the Humanities and Social Sciences 970, California Institute of Technology, Division of the Humanities and Social Sciences.
  9. 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, MIT Press, vol. 5(6), pages 1223-1268, December.
  10. David Cooper & John H. Kagel, 2003. "Lessons Learned: Generalizing Learning Across Games," American Economic Review, American Economic Association, American Economic Association, vol. 93(2), pages 202-207, May.
  11. Enrique Fatas & Tibor Neugebauer & Javier Perote, 2006. "Within-Team Competition In The Minimum Effort Coordination Game," Pacific Economic Review, Wiley Blackwell, Wiley Blackwell, vol. 11(2), pages 247-266, 06.
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Citations

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Cited by:
  1. Chong, Sophia & Guillen, Pablo, 2012. "The discreet charm of the collective contract," Working Papers, University of Sydney, School of Economics 2012-03, University of Sydney, School of Economics.
  2. Kyle Hydman & Antoine Terracol & Jonathan Vaksmann, 2009. "Learning and Sophistication in Coordination Games," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00607232, HAL.
  3. Riedl Arno & Rohde Ingrid M.T. & Strobel Martin, 2011. "Efficient Coordination in Weakest-Link Games," Research Memorandum, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR) 057, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  4. 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, Economics faculty of Tehran university, vol. 12(3), pages 109-126, fall & wi.
  5. Al-Ubaydli, Omar & Jones, Garett & Weel, Jaap, 2010. "Patience, cognitive skill and coordination in the repeated stag hunt," MPRA Paper 27723, University Library of Munich, Germany.
  6. Gürerk, Özgür & Irlenbusch, Bernd & Rockenbach, Bettina, 2009. "Motivating teammates: The leader's choice between positive and negative incentives," Journal of Economic Psychology, Elsevier, Elsevier, vol. 30(4), pages 591-607, August.
  7. Sarah Jacobson & Jason Delaney, 2012. "The Good of the Few: Reciprocity in the Provision of a Public Bad," Department of Economics Working Papers, Department of Economics, Williams College 2012-02, Department of Economics, Williams College.
  8. Stefania Bortolotti & Giovanna Devetag & Andreas Ortmann, 2009. "Exploring the effects of real effort in a weak-link experiment," CEEL Working Papers, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia 0901, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
  9. Ioannou, Christos A. & Makris, Miltiadis, 2014. "An Experimental Study Of Uncertainty In Coordination Games," Discussion Paper Series In Economics And Econometrics, Economics Division, School of Social Sciences, University of Southampton 1401, Economics Division, School of Social Sciences, University of Southampton.
  10. Boris van Leeuwen & Theo Offerman & Arthur Schram, 2013. "Superstars Need Social Benefits: An Experiment on Network Formation," Tinbergen Institute Discussion Papers, Tinbergen Institute 13-112/I, Tinbergen Institute.
  11. Rachel Croson & Enrique Fatas & Tibor Neugebauer, 2006. "An Experimental Analysis Of Conditional Cooperation," Working Papers. Serie AD, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) 2006-24, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  12. Donna Harris & Klaus Abbink, 2012. "In-group favouritism and out-group discimination in naturally occurring groups," Economics Series Working Papers, University of Oxford, Department of Economics 616, University of Oxford, Department of Economics.
  13. 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.
  14. Heijden, E.C.M. van der & Moxnes, E., 2011. "Leading by Example to Protect the Environment; Do the Costs of Leading Matter?," Discussion Paper, Tilburg University, Center for Economic Research 2011-043, Tilburg University, Center for Economic Research.
  15. Philip J. Grossman & Mana Komai & James E. Jensen, 2012. "Leadership and Gender in Groups: An Experiment," Development Research Unit Working Paper Series, Monash University, Department of Economics 42-12, Monash University, Department of Economics.

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