Efficient Large-Size Coordination via Voluntary Group Formation: An Experiment

33 Pages Posted: 5 Mar 2016

See all articles by Chun-Lei Yang

Chun-Lei Yang

Maolong Xu

Tilburg University

Juanjuan Meng

Peking University - Guanghua School of Management

Fangfang Tang

Peking University - National School of Development

Multiple version iconThere are 2 versions of this paper

Date Written: July 3, 2015

Abstract

Efficient coordination in large groups is a fundamental issue in economic organizations. We consider the weak-link game with the feature of economies of scale that is necessary for voluntary group growth, in a minimal setup with exit and merger options that allows for bi-directional changes in group size. We show that large groups with efficient outcomes prevail in most communities. Seed groups form that seem to set a norm of both maximal effort level and mutual trust that there will be no panic when seeing noisy dips. Initial doubters are eventually converted into norm abiders. A restart further speeds up the process of coordination success.

Keywords: Efficient coordination, large group, weak-link game, economies of scale, voluntary exit, merger

JEL Classification: C71, C92

Suggested Citation

Yang, Chun-Lei and Xu, Maolong and Meng, Juanjuan and Tang, Fangfang, Efficient Large-Size Coordination via Voluntary Group Formation: An Experiment (July 3, 2015). Available at SSRN: https://ssrn.com/abstract=2742015 or http://dx.doi.org/10.2139/ssrn.2742015

Maolong Xu

Tilburg University ( email )

P.O. Box 90153
Tilburg, DC Noord-Brabant 5000 LE
Netherlands

Juanjuan Meng

Peking University - Guanghua School of Management ( email )

Peking University
Beijing, Beijing 100871
China

HOME PAGE: http://www.gsm.pku.edu.cn/faculty_and_research/en/en_teacherDetail.html?crmurl=http://crm.gsm.pku.ed

Fangfang Tang

Peking University - National School of Development ( email )

Beijing, 100871
China

No contact information is available for Chun-Lei Yang

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
70
Abstract Views
673
rank
387,574
PlumX Metrics