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Punishment Fosters Efficiency in the Minimum Effort Coordination Game

Author

Listed:
  • Fabrice Le Lec

    () (Lille Economics and Management UMR)

  • Astrid Matthey

    () (Max Planck Institute of Economics, Jena, Germany)

  • Ondrej Rydval

    () (Rydval: Max Planck Institute of Economics, Jena, GermanyM; and CERGE-EI, Charles University Prague and Academy of Sciences of the Czech Republic, Prague, Czech Republic)

Abstract

Using a laboratory experiment, we examine whether informal monetary sanctions can lead to better coordination in a repeated minimum effort coordination game. While most groups first experience inefficient coordination, the efficiency increases substantially after introducing an ex post sanctioning possibility. Namely, subjects can assign punishment points to other group members upon observing their efforts, which is costly for the punisher but twice as costly for the punished member. By contrast, introducing instead an ex post costless communication possibility fails to permanently increase efficiency. This suggests that decentralized monetary sanctions can play a major role as a coordination device in Pareto-ranked coordination settings, such as teamwork in firms and other organizational contexts.

Suggested Citation

  • Fabrice Le Lec & Astrid Matthey & Ondrej Rydval, 2012. "Punishment Fosters Efficiency in the Minimum Effort Coordination Game," Jena Economic Research Papers 2012-030, Friedrich-Schiller-University Jena.
  • Handle: RePEc:jrp:jrpwrp:2012-030
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    File URL: http://pubdb.wiwi.uni-jena.de/pdf/wp_2012_030.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    coordinatio; 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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