Facilitating efficient coordination in large groups: small incentive payments in nested groups

Yohei Mitani () and Kohei Suzuki
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Yohei Mitani: Kyoto University
Kohei Suzuki: Kyoto University

Journal of the Economic Science Association, 2020, vol. 6, issue 1, No 6, 68-76

Abstract: Abstract Most large real-world organizations contain multiple smaller groups, such as working groups within firms. However, can this sort of nested groups be used to alleviate coordination failures in the larger group? We report on a multi-player Stag Hunt experiment wherein we hierarchically structure a large group into mutually exclusive small groups. We offer varying incentive payments if efficient coordination is achieved at a large or small group level. The novelty of our design is that we hold the total payment size constant between treatments. In our nested incentive treatment, we reduce the reward for achieving large-group coordination by a small amount and reallocate the same amount to successful small-group coordination. The results reveal that incentive reallocations privileging small groups facilitate efficient large-group coordination in the nested group structure.

Keywords: Experiments; Large-group coordination; Nested groups; Coordination games (search for similar items in EconPapers)
JEL-codes: C72 C91 C92 D02 M52 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s40881-020-00093-2

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