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

Author

Listed:
  • Fabrice Le Lec
  • Ondrej Rydval
  • Astrid Matthey
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.

Suggested Citation

  • Fabrice Le Lec & Ondrej Rydval & Astrid Matthey, 2014. "Efficiency and Punishment in a Coordination Game: Voluntary Sanctions in the Minimum Effort Game," CERGE-EI Working Papers wp526, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
  • Handle: RePEc:cer:papers:wp526
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    File URL: http://www.cerge-ei.cz/pdf/wp/Wp526.pdf
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    References listed on IDEAS

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    Cited by:

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    2. Arno Riedl & Ingrid M. T. Rohde & Martin Strobel, 2021. "Free Neighborhood Choice Boosts Socially Optimal Outcomes in Stag-Hunt Coordination Problem," CESifo Working Paper Series 9012, CESifo.

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    More about this item

    Keywords

    coordination; minimum effort; order-statistic game; punishment; sanction; weakest link;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

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