Can loss framing improve coordination in the minimum effort game?

Christopher Roby ()
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Christopher Roby: The University of Tampa

Journal of Economic Interaction and Coordination, 2021, vol. 16, issue 3, No 5, 557-588

Abstract: Abstract I study how framing payoffs as losses affects group coordination using the minimum effort game. The previous literature shows groups as small as four have a difficult time coordinating on an efficient outcome, even in the presence of higher payoffs for more efficient outcomes. Though penalties for inefficient coordination behavior have been studied in a variety of contexts, the role of losses on coordination behavior has not. Loss framing has been shown to induce more efficient actions in a variety of other areas, since individuals tend to be more sensitive to losses than gains. I examine the framing effect of losses, specifically if framing payoffs as losses can lead to payoff-dominant coordination, using three treatments. These treatments help tease out the effects and dynamics of coordination behavior when payoffs are framed as losses. I find that framing payoffs as losses leads to improvements in coordination, demonstrating the robustness of loss framing in the setting of the minimum effort game.

Date: 2021
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DOI: 10.1007/s11403-021-00318-5

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