American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
A Change Would Do You Good .... An Experimental Study on How to Overcome Coordination Failure in Organizations
American Economic Review
vol. 96,
no. 3, June 2006
(pp. 669–693)
Abstract
We study how financial incentives can be used to overcome a history of coordination failure using controlled laboratory experiments. Subjects' payoffs depend on coordinating at high effort levels. In an initial phase, the benefits of coordination are low, and play typically converges to an inefficient outcome. We then explore varying financial incentives to coordinate at a higher effort level. An increase in the benefits of coordination leads to improved coordination, but large increases have no more impact than small increases. Once subjects have coordinated on a higher effort level, reductions in the incentives to coordinate have little effect on behavior. (JEL C92, D23, J31, L23, M52)Citation
Brandts, Jordi, and David J. Cooper. 2006. "A Change Would Do You Good .... An Experimental Study on How to Overcome Coordination Failure in Organizations." American Economic Review, 96 (3): 669–693. DOI: 10.1257/aer.96.3.669Additional Materials
JEL Classification
- C92 Design of Experiments: Laboratory, Group Behavior
- D23 Organizational Behavior; Transaction Costs; Property Rights