The Effect of Intergroup Competition on Group Coordination: An Experimental Study

Universitat Pompeu Fabra, Department of Economics Working Paper No. 393

23 Pages Posted: 9 Mar 2000

See all articles by Gary Bornstein

Gary Bornstein

Hebrew University of Jerusalem - Jerusalem School of Business Administration

Uri Gneezy

University of California, San Diego (UCSD) - Rady School of Management

Rosemarie Nagel

Universitat Pompeu Fabra - Department of Economics

Date Written: May 1999

Abstract

We report an experiment on the effect of intergroup competition on group coordination in the minimal-effort game (Van Huyck et al., 1990). The competition was between two 7-person groups. Each player in each group independently chose an integer from 1 to 7. The group with the higher minimum won the competition and each of its members was paid according to the game?s original payoff matrix. Members of the losing group were paid nothing. In case of a tie, each player was paid half the payoff in the original matrix. This treatment was contrasted with two control treatments where each of the two groups played an independent coordination game, either with or without information about the minimum chosen by the outgroup. Although the intergroup competition does not change the set of strict equilibria, we found that it improved collective rationality by moving group members in the direction of higher-payoff equilibria. Merely providing group members with information about the minimal-effort level in the other group was not sufficient to generate this effect.

JEL Classification: C72, C91, C92

Suggested Citation

Bornstein, Gary and Gneezy, Uri and Nagel, Rosemarie, The Effect of Intergroup Competition on Group Coordination: An Experimental Study (May 1999). Universitat Pompeu Fabra, Department of Economics Working Paper No. 393. Available at SSRN: https://ssrn.com/abstract=189434 or http://dx.doi.org/10.2139/ssrn.189434

Gary Bornstein (Contact Author)

Hebrew University of Jerusalem - Jerusalem School of Business Administration ( email )

Mount Scopus
Jerusalem, 91905
Israel

Uri Gneezy

University of California, San Diego (UCSD) - Rady School of Management ( email )

9500 Gilman Drive
Rady School of Management
La Jolla, CA 92093
United States

Rosemarie Nagel

Universitat Pompeu Fabra - Department of Economics ( email )

Ramon Trias Fargas 25-27
08005 Barcelona
Spain
+34 93 542 3729 (Phone)
+34 93 542 1746 (Fax)

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