Work

A Change Would Do You Good .... An Experimental Study on How to Overcome Coordination Failure in Organizations

Year: 2006

Type: article

Abstract: We study how financial incentives can be used to overcome a history of coordination failure using controlled laboratory experiments. Subjects' payoffs depend on coordinating at high effort levels. In an initial phase, the benefits of coordination are low, and play typically converges to an inefficient outcome. We then explore varying financial incentives to coordinate at a higher effort level. An increase in the benefits of coordination leads to improved coordination, but large increases have no more impact than small increases. Once subjects have coordinated on a higher effort level, reductions in the incentives to coordinate have little effect on behavior.

Source: American Economic Review

DOI: 10.1257/aer.96.3.669

Authors: Jordi Brandts, David J Cooper

Institutions: Institut d'Anàlisi Econòmica, Case Western Reserve University

Language: English

Topic: Experimental Behavioral Economics Studies

Subfield: Safety Research

Field: Social Sciences

Domain: Social Sciences

Open Access status: green

Funders: National Science Foundation, Ministerio de Educación y Cultura

Award: Corporate Turnarounds: An Experimental Examination