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Facilitating efficient coordination in large groups: small incentive payments in nested groups

Published online by Cambridge University Press:  01 January 2025

Yohei Mitani Open the ORCID record for Yohei Mitani [Opens in a new window]  and
Kohei Suzuki
Yohei Mitani*
Affiliation:
Division of Natural Resource Economics, Graduate School of Agriculture, Kyoto University, Kyoto 606-8502, Japan
Kohei Suzuki
Affiliation:
Division of Natural Resource Economics, Graduate School of Agriculture, Kyoto University, Kyoto 606-8502, Japan
*
e-mail: mitani.yohei.7w@kyoto-u.ac.jp; yomitani@gmail.com
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Abstract

Most large real-world organizations contain multiple smaller groups, such as working groups within firms. However, can this sort of nested groups be used to alleviate coordination failures in the larger group? We report on a multi-player Stag Hunt experiment wherein we hierarchically structure a large group into mutually exclusive small groups. We offer varying incentive payments if efficient coordination is achieved at a large or small group level. The novelty of our design is that we hold the total payment size constant between treatments. In our nested incentive treatment, we reduce the reward for achieving large-group coordination by a small amount and reallocate the same amount to successful small-group coordination. The results reveal that incentive reallocations privileging small groups facilitate efficient large-group coordination in the nested group structure.

Keywords

ExperimentsLarge-group coordinationNested groupsCoordination games

JEL classification

D02: Institutions: Design, Formation, Operations, and Impact C91: Laboratory, Individual Behavior M52: Compensation and Compensation Methods and Their Effects C92: Laboratory, Group Behavior C72: Noncooperative Games
Type
Original Paper
Information
Journal of the Economic Science Association , Volume 6 , Issue 1 , June 2020 , pp. 68 - 76
Copyright
Copyright © Economic Science Association 2020

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Footnotes

Electronic supplementary material The online version of this article (https://doi.org/10.1007/s40881-020-00093-2) contains supplementary material, which is available to authorized users.

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