A Change Would Do You Good …. An Experimental Study on How to Overcome Coordination Failure in Organizations

Authors: Brandts, Jordi; Cooper, David J.

Source: The American Economic Review, Volume 96, Number 3, June 2006 , pp. 669-693(25)

Publisher: American Economic Association

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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.

Document Type: Research article

Publication date: 2006-06-01

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The American Economic Review is a general-interest economics journal. The journal is published quarterly and contains articles on a broad range of topics. Established in 1911, the AER is among the nation's oldest and most respected scholarly journals in the economics profession.
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