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Maintaining Efficiency while Integrating Entrants from Lower Performing Groups: an Experimental Study

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  • Timothy C. Salmon
  • Roberto A. Weber

Abstract

Efficiently growing a group or firm often requires integration of individuals from lower-performing entities. We explore the effectiveness of two policies intended to facilitate such integration, using a laboratory experiment that models production as a coordination game with Pareto-ranked equilibria. We initially create an efficient group and an inefficient one. We then allow individuals to move into the high-performing group and vary by treatment whether movement is unrestricted, limited to one entrant per period, or subject to an entry exam. We include two additional treatments that combine the two restrictions in different ways to help understand why the institutions are effective in maintaining coordination. We find that both restrictions work to maintain efficient coordination but they are effective for different reasons.
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Suggested Citation

  • Timothy C. Salmon & Roberto A. Weber, 2017. "Maintaining Efficiency while Integrating Entrants from Lower Performing Groups: an Experimental Study," Economic Journal, Royal Economic Society, vol. 127(600), pages 417-444, March.
    • Handle: RePEc:wly:econjl:v:127:y:2017:i:600:p:417-444
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    File URL: http://hdl.handle.net/10.1111/ecoj.2017.127.issue-600
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    Cited by:

    1. Maoliang Ye & Jie Zheng & Plamen Nikolov & Sam Asher, 2020. "One Step at a Time: Does Gradualism Build Coordination?," Management Science, INFORMS, vol. 66(1), pages 113-129, January.
    2. Alejandro Caparrós & Esther Blanco & Philipp Buchenauer & Michael Finus, 2020. "Team Formation in Coordination Games with Fixed Neighborhoods," Working Papers 2004, Instituto de Políticas y Bienes Públicos (IPP), CSIC.
    3. repec:hum:wpaper:sfb649dp2011-039 is not listed on IDEAS
    4. Riyanto, Yohanes E. & Teh, Tat-How, 2020. "Highly flexible neighborhood promotes efficient coordination: Experimental evidence," European Economic Review, Elsevier, vol. 129(C).
    5. Ramón Cobo-Reyes & Gabriel Katz & Thomas Markussen & Simone Meraglia, 2022. "Voting on sanctioning institutions in open and closed communities: experimental evidence," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 58(3), pages 619-677, April.
    6. Kaytlynn Clemons & David B. Johnson & Amy Kiger & Janice Putnam, 2018. "Decreasing Campus Smoking With Punishments And Social Pressures," Contemporary Economic Policy, Western Economic Association International, vol. 36(4), pages 629-643, October.
    7. Alexandra Baier & Natalie Struwe, 2024. "Accepting the Newcomer: Do Information and Voting Shape Cooperation within Groups?," Working Papers 2024-08, Faculty of Economics and Statistics, Universität Innsbruck.
    8. Cooper, David J. & Ioannou, Christos A. & Qi, Shi, 2018. "Endogenous incentive contracts and efficient coordination," Games and Economic Behavior, Elsevier, vol. 112(C), pages 78-97.
    9. Kopányi-Peuker, Anita & Offerman, Theo & Sloof, Randolph, 2018. "Team production benefits from a permanent fear of exclusion," European Economic Review, Elsevier, vol. 103(C), pages 125-149.
    10. Otten, Kasper & Buskens, Vincent & Przepiorka, Wojtek & Cherki, Boaz & Israel, Salomon, 2024. "Cooperation, punishment, and group change in multilevel public goods experiments," European Economic Review, Elsevier, vol. 164(C).
    11. Otten, Kasper & Buskens, Vincent & Przepiorka, Wojtek & Ellemers, Naomi, 2021. "Cooperation between newcomers and incumbents: The role of normative disagreements," Journal of Economic Psychology, Elsevier, vol. 87(C).

    More about this item

    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; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

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