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

18 Pages Posted: 30 May 2017

See all articles by Chun-Lei Yang

Chun-Lei Yang

Mao‐Long Xu

Tilburg University

Juanjuan Meng

Peking University - Guanghua School of Management

Fang‐Fang Tang

Peking University

Multiple version iconThere are 2 versions of this paper

Date Written: May 2017

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. 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.

Suggested Citation

Yang, Chun-Lei and Xu, Mao‐Long and Meng, Juanjuan and Tang, Fang‐Fang, Efficient Large‐Size Coordination via Voluntary Group Formation: An Experiment (May 2017). International Economic Review, Vol. 58, Issue 2, pp. 651-668, 2017, Available at SSRN: https://ssrn.com/abstract=2976611 or http://dx.doi.org/10.1111/iere.12230

Mao‐Long Xu

Tilburg University

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

Fang‐Fang Tang

Peking University

No. 38 Xueyuan Road
Haidian District
Beijing, Beijing 100871
China

No contact information is available for Chun-Lei Yang

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