Revealing the Economic Consequences of Group Cohesion

59 Pages Posted: 19 Jun 2017

See all articles by Simon Gaechter

Simon Gaechter

University of Nottingham; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute)

Chris Starmer

University of Nottingham - School of Economics

Fabio Tufano

Università degli Studi di Milano-Bicocca - Center for Interdisciplinary Studies in Economics, Psychology & Social Sciences (CISEPS); Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS)

Abstract

We introduce the concept of "group cohesion" to capture the economic consequences of ubiquitous social relationships in group production. We measure group cohesion, adapting the "oneness scale" from psychology. A comprehensive program of new experiments reveals the considerable economic impact of cohesion: higher cohesion groups are significantly more likely to achieve Pareto-superior outcomes in classic weak-link coordination games. We show that effects of cohesion are economically large, robust, and portable. We identify social preferences as a primary mechanism explaining the effects of cohesion. Our results provide proof of concept for group cohesion as a productive new tool of economic research.

Keywords: social relationships, group cohesion, oneness, coordination, weak-link game, experiments, real groups

JEL Classification: C92, D03

Suggested Citation

Gachter, Simon and Starmer, Chris and Tufano, Fabio, Revealing the Economic Consequences of Group Cohesion. IZA Discussion Paper No. 10824, Available at SSRN: https://ssrn.com/abstract=2988171 or http://dx.doi.org/10.2139/ssrn.2988171

Simon Gachter (Contact Author)

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

CESifo (Center for Economic Studies and Ifo Institute)

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Munich, DE-81679
Germany

Chris Starmer

University of Nottingham - School of Economics ( email )

University Park
Room B2, Economics & Geography Building
Nottingham NG7 2RD
United Kingdom
+44 (0)115 846 6067 (Phone)
+44 (0)115 951 4159 (Fax)

Fabio Tufano

Università degli Studi di Milano-Bicocca - Center for Interdisciplinary Studies in Economics, Psychology & Social Sciences (CISEPS) ( email )

Piazza dell'Ateneo Nuovo, 1
Milano, 20126
Italy

Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS) ( email )

Piazza dell'Ateneo Nuovo, 1
Milan, 20126
Italy

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