EconPapers    
Economics at your fingertips  
 

Coordination under Loss Contracts

Steffen Ahrens, Lea Bitter and Ciril Bosch-Rosa
Additional contact information
Steffen Ahrens: TU Berlin
Lea Bitter: TU Berlin
Ciril Bosch-Rosa: TU Berlin

No 256, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: In this paper we study the effects that loss contracts—prepayments that can be clawbacked later—have on group coordination when there is strategic uncertainty. We compare the choices made by experimental subjects in a minimum effort game. In control sessions, incentives are formulated as a classic gain contract, while in treatment sessions, incentives are framed as an isomorphic loss contract. Our results show that loss contracts reduce the minimum efforts of groups and worsen coordination between group members, both leading to lower payoffs. However, these results depend strongly on the group’s gender composition; groups with a larger proportion of women are better at coordinating and exert more effort.

Keywords: strategic uncertainty; loss aversion; coordination; contract design; framing; experiment (search for similar items in EconPapers)
JEL-codes: C91 D84 G11 G41 (search for similar items in EconPapers)
Date: 2020-09-07
New Economics Papers: this item is included in nep-exp and nep-gth
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://rationality-and-competition.de/wp-content/uploads/2020/09/256.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rco:dpaper:256

Access Statistics for this paper

More papers in Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition
Bibliographic data for series maintained by Viviana Lalli ().

 
Page updated 2021-05-22
Handle: RePEc:rco:dpaper:256