Maintaining efficiency while integrating entrants from lower-performing environments: an experimental study
AbstractEfficient growth often requires the integration of individuals from lower-performing groups, firms, or societies into higher-performing ones. Such integration may be difficult without facilitating interventions or restrictions. We explore, using a laboratory experiment, the effectiveness of two regularly-employed entry restrictions: entry quotas and entry exams. We use a coordination game with Pareto-ranked equilibria, in which we allow an efficiently-coordinated group and an inefficiently-coordinated one to arise endogenously. We then allow individuals to move from the low-performing group to the high-performing one. We vary whether such movement is unrestricted, is limited to one entrant per period, or is subject to passing an entry exam. We find both kinds of restrictions improve the efficient integration of entrants, but that there is no additional benefit obtained by their combination. The restrictions lead to improved behavior among entrants, but they have a stronger influence on the maintenance of good behavior among incumbents in the high-performing group.
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Bibliographic InfoPaper provided by Department of Economics - University of Zurich in its series ECON - Working Papers with number 035.
Date of creation: Oct 2011
Date of revision:
Growth; entry; coordination; experiments;
Find related papers by JEL classification:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
- M12 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Personnel Management; Executives; Executive Compensation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-11-14 (All new papers)
- NEP-EXP-2011-11-14 (Experimental Economics)
- NEP-GTH-2011-11-14 (Game Theory)
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