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Efficiency and Punishment in a Coordination Game: Voluntary Sanctions in the Minimum Effort Game

Author

Listed:
  • Fabrice Le Lec
  • Ondrej Rydval
  • Astrid Matthey

Abstract

Using a laboratory experiment, we examine whether voluntary monetary sanctions induce subjects to coordinate more efficiently in a repeated minimum effort coordination game. While most groups first experience inefficient coordination in a baseline treatment, the efficiency increases substantially once ex post sanctioning opportunities are introduced, that is, when one can assign costly punishment points to other group members in order to reduce their payoffs. We compare the effect of this voluntary punishment possibility with the effect of ex post costless communication: in contrast to the punishment treatment, the latter only temporarily increases efficiency and fails to do so permanently. This suggests that decentralized sanctions can play an important role as a coordination device in Pareto-ranked coordination settings, such as teamwork in firms and other organizational contexts.

Suggested Citation

  • Fabrice Le Lec & Ondrej Rydval & Astrid Matthey, 2014. "Efficiency and Punishment in a Coordination Game: Voluntary Sanctions in the Minimum Effort Game," CERGE-EI Working Papers wp526, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
  • Handle: RePEc:cer:papers:wp526
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    References listed on IDEAS

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    1. Gary S. Becker & Kevin M. Murphy, 1994. "The Division of Labor, Coordination Costs, and Knowledge," NBER Chapters,in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education (3rd Edition), pages 299-322 National Bureau of Economic Research, Inc.
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    3. David Masclet & Charles Noussair & Steven Tucker & Marie-Claire Villeval, 2003. "Monetary and Nonmonetary Punishment in the Voluntary Contributions Mechanism," American Economic Review, American Economic Association, vol. 93(1), pages 366-380, March.
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    7. 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 234-248, March.
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    14. 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.
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    Cited by:

    1. Lu Dong & Maria Montero & Alex Possajennikov, 2015. "Communication, Leadership and Coordination Failure," Discussion Papers 2015-17, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    2. repec:kap:theord:v:84:y:2018:i:4:d:10.1007_s11238-017-9617-9 is not listed on IDEAS

    More about this item

    Keywords

    coordination; minimum effort; order-statistic game; punishment; sanction; weakest link;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

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