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

Fabrice Le Lec, Ondrej Rydval and Astrid Matthey

CERGE-EI Working Papers from The Center for Economic Research and Graduate Education - Economics Institute, Prague

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.

Keywords: coordination; minimum effort; order-statistic game; punishment; sanction; weakest link (search for similar items in EconPapers)
JEL-codes: C72 C91 D01 D03 (search for similar items in EconPapers)
Date: 2014-12
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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