A change would do you good ... An experimental study on how to overcome coordination failure in organizations

Jordi Brandts, David J. Cooper

    Research output: Contribution to journalArticleResearchpeer-review

    119 Citations (Scopus)

    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.
    Original languageEnglish
    Pages (from-to)669-693
    JournalAmerican Economic Review
    Volume96
    Issue number3
    DOIs
    Publication statusPublished - 29 Aug 2006

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