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Maintaining efficiency while integrating entrants from lower-performing environments: an experimental study

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  • Timothy C. Salmon
  • Roberto A. Weber

Abstract

Efficient 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 Info

Paper provided by Department of Economics - University of Zurich in its series ECON - Working Papers with number 035.

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Date of creation: Oct 2011
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Handle: RePEc:zur:econwp:035

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Keywords: Growth; entry; coordination; experiments;

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  1. T. K. Ahn & R. Mark Isaac & Timothy C. Salmon, 2008. "Endogenous Group Formation," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 10(2), pages 171-194, 04.
  2. 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, vol. 80(1), pages 234-48, March.
  3. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  4. Jordi Brandts & David J. Cooper, 2004. "A Change Would Do You Good . . . An Experimental Study on How to Overcome Coordination Failure in Organizations," UFAE and IAE Working Papers 606.04, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  5. 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.
  6. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
  7. Kunreuther, Howard & Heal, Geoffrey, 2003. " Interdependent Security," Journal of Risk and Uncertainty, Springer, vol. 26(2-3), pages 231-49, March-May.
  8. Card, David, 2004. "Is the New Immigration Really So Bad?," IZA Discussion Papers 1119, Institute for the Study of Labor (IZA).
  9. Ortega, Francesc, 2005. "Immigration quotas and skill upgrading," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1841-1863, September.
  10. Rachel M. Friedberg, 2001. "The Impact Of Mass Migration On The Israeli Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 116(4), pages 1373-1408, November.
  11. Ahn, T.K. & Isaac, R. Mark & Salmon, Timothy C., 2009. "Coming and going: Experiments on endogenous group sizes for excludable public goods," Journal of Public Economics, Elsevier, vol. 93(1-2), pages 336-351, February.
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Cited by:
  1. Dietmar Fehr, 2011. "The Persistence of "Bad" Precedents and the Need for Communication: A Coordination Experiment," SFB 649 Discussion Papers SFB649DP2011-039, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.

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