The price of consensus: Individual versus team behaviour in coordination games

Gio, 01/26/2017 - 12:01 / 13:00

207, Viale Romania, 32

Speaker: Enrique Fatas , University of East Anglia

Teams outperform individuals in coordination games with forced consensus, i.e. when unanimity is imposed as a decision rule. In this paper, we explore the boundaries of this finding and compare the effectiveness of teams and individuals in a setting in which consensus is not required to reach a team decision, and individuals may be weakly monitored within their teams. In our main treatment, groups of four teams jointly produce in a quasi-continuous version of the minimum effort game. As the overall output is determined by the minimum team contribution, the strategic interaction between teams follow the logic of a coordination game. As unanimity is not required within the team, and effort is individually costly, the game becomes a social dilemma within each team, as individuals have an incentive to free ride on the efforts of others. The game combines properties of coordination games and public goods games in a realistic setting in which individual effort is costly. We compare this main treatment with two different baselines in which individuals rather than teams jointly produce outcome, with two different technologies: weakest link (as in the interaction between teams in our main treatment) and linear (as in the interaction within teams). Our findings suggest that individuals outperform teams, who suffer significant efficiency losses, not because they coordinate worse than individuals, but because they reach the inefficient equilibrium faster, and because imperfect monitoring breaks the symmetry of conditional cooperation.