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Recommended play and performance bonuses in the minimum effort coordination game

Published online by Cambridge University Press:  14 March 2025

Ananish Chaudhuri  and
Tirnud Paichayontvijit
Ananish Chaudhuri*
Affiliation:
Department of Economics, University of Auckland, 655 Owen G Glenn Building Level 6, 12 Grafton Road, Auckland, New Zealand
Tirnud Paichayontvijit*
Affiliation:
Department of Economics, University of Auckland, 655 Owen G Glenn Building Level 6, 12 Grafton Road, Auckland, New Zealand
*
e-mail: a.chaudhuri@auckland.ac.nz
e-mail: t.paichayontvijit@auckland.ac.nz
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Abstract

We use experiments to investigate the efficacy of recommended play and performance bonuses in resolving coordination failures in a stag-hunt type coordination game with multiple Pareto-ranked equilibria, often referred to as a “weak link” game. Participants routinely find it difficult to coordinate to the payoff-dominant outcome in such games. We look at performance in both fixed and randomly re-matched groups. A recommendation to the payoff-dominant outcome is successful in resolving coordination failures with fixed groups but only when this recommendation is “common knowledge” in the sense that all members of the group receive the same message and it is read out loud for everyone to hear. Resolving coordination failures is harder with randomly re-matched groups and the greatest success is achieved only upon payment of a performance bonus.

Keywords

Weak-link gamesCoordinationRecommendationsPerformance BonusExperiments

JEL classification

C91: Laboratory, Individual Behavior M52: Compensation and Compensation Methods and Their Effects L23: Organization of Production C72: Noncooperative Games
Type
Research Article
Information
Experimental Economics , Volume 13 , Issue 3 , September 2010 , pp. 346 - 363
Copyright
Copyright © Economic Science Association 2010

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Footnotes

Electronic supplementary material The online version of this article (doi: 10.1007/s10683-010-9245-5) contains supplementary material, which is available to authorized users.

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Supplementary material: File

Chaudhuri and Paichayontvijit supplementary material

Appendix to “Recommended Play and Performance Bonuses in the Minimum Effort Coordination Game” by Ananish Chaudhuri and Tirnud Paichayontvijit
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