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EFFICIENT LARGE‐SIZE COORDINATION VIA VOLUNTARY GROUP FORMATION: AN EXPERIMENT
Author(s) -
Yang ChunLei,
Xu MaoLong,
Meng Juanjuan,
Tang FangFang
Publication year - 2017
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/iere.12230
Subject(s) - norm (philosophy) , coordination game , group (periodic table) , global game , process (computing) , set (abstract data type) , turnover , computer science , microeconomics , mathematical economics , economics , political science , law , management , operating system , programming language , chemistry , organic chemistry
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.