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Creating Expectational Assets in the Laboratory: Coordination in ‘Weakest‐Link’ Games
Author(s) -
Knez Marc,
Camerer Colin
Publication year - 1994
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/smj.4250150908
Subject(s) - link (geometry) , asset (computer security) , product (mathematics) , quality (philosophy) , component (thermodynamics) , microeconomics , process (computing) , resource (disambiguation) , liability , business , economics , marketing , computer science , mathematics , finance , computer network , philosophy , physics , geometry , computer security , epistemology , thermodynamics , operating system
We study coordination games with multiple equilibria, in which players are penalized for picking numbers higher than the minimum anybody picks, and everyone prefers a larger minimum. ‘Weakest‐link games like this model organizational situations in which the worst component of a product or process determines its overall quality. In experimental groups, the best equilibrium was reached infrequently. Aggregating two groups into a larger one always hurt. We argue that players’ beliefs about what the minimum will be are an ‘expectational asset’ (or liability) which is socially complex, linking organization‐level behavior and the resource‐based view of the firm.