Maintaining efficiency while integrating entrants from lower-performing groups: an experimental study

Efficiently growing a group or firm often requires integration of individuals from lower-performing entities. We explore the effectiveness of two policies intended to facilitate such integration, using a laboratory experiment that models production as a coordination game with Pareto-ranked equilibria. We initially create an efficient group and an inefficient one. We then allow individuals to move into the high-performing group and vary by treatment whether movement is unrestricted, limited to one entrant per period, or subject to an entry exam. We include two additional treatments that combine the two restrictions in different ways to help understand why the institutions are effective in maintaining coordination. We find that both restrictions work to maintain efficient coordination but they are effective for different reasons.Growth, entry, coordination, experiments

Identifying Social Norms Using Coordination Games: Why Does Dictator Game Sharing Vary?

We explore the influence of social norms on behavior. To do so, we introduce a method for identifying norms, based on the property that social norms reflect social consensus regarding the appropriateness of different possible behaviors. We demonstrate that the norms we elicit, along with a simple model combining concern for norm-compliance with utility for money, predict changes in behavior across several variants of the dictator game in which behavior changes substantially following the introduction of minor contextual variations. Our findings indicate that people care not just about monetary payoffs but also care about the social appropriateness of any action they take. Our work also suggests that a social norm is not always a single action that should or should not be taken, but rather a profile of varying degrees of social appropriateness for different available actions.norms, matching games, dictator games

The Role of Tacit Routines in Coordinating Activity

We explore the influence of tacit routines in obtaining coordination. Our experiment uses simple laboratory "firms," in which we interfere with one kind of firm's ability to develop tacit routines. Thus, our firms vary in the degree to which they rely on this kind of knowledge – instead of other, explicit, mechanisms – for obtaining coordination. We find that interfering with the development of tacit routines harms firms’ ability to coordinate. We then explore the extent to which firms are able to transfer their ability to coordinate activity, either to a new domain or to new members. Our results indicate that tacit routines transfer more easily than other mechanisms to a new, but closely related, domain. However, routine-based firms perform slightly worse in their ability to incorporate new members

Timing and Virtual Observability in Ultimatum Bargaining and "Weak Link" Coordination Games

Previous studies have shown that simply knowing one player moves first can affect behavior in games, even when the first-mover's moves are known to be unobservable. This observation violates the game-theoretic principle that timing of unobserved moves is irrelevant, but is consistent with virtual observability, a theory of how timing can matter without the ability to observe actions. However, this previous research only shows that timing matters in games where knowledge that one player moved first can help select that player's preferred equilibrium, presenting an alternative explanation to virtual observability. We extend this work by varying timing of unobservable moves in ultimatum bargaining games and “weak link” coordination games. In the latter, the equilibrium selection explanation does not predict any change in behavior due to timing differences. We find that timing without observability affects behavior in both games, but not substantially

Pre-Play communication with forgone costly messages: experimental evidence on forward induction

We study communication in a two-player coordination game with Pareto-ranked equilibria. Prior research demonstrates that efficient coordination is difficult without communication but obtains regularly with (mandatory) costless pre-play messages. In a laboratory experiment, we modify communication by making the sending of messages optional and costly. Even small costs dramatically reduce message use, but efficient coordination of actions occurs with similar frequency to that observed under costless communication. Our results can be accounted for by Govindan and Wilson's formalization of forward induction (GW-FI), which selects, among the pure-strategy equilibrium outcomes, the one in which efficiency is achieved without communication. Consistent with the introspective character of GW-FI, the fraction of players who achieve efficient coordination by forgoing the use of reasonably costly optional messages is substantial from the first period, is remarkably stable at that level, and is not significantly affected by learning.Coordination, communication, forward induction, experiment, stag hunt

High-Speed Communications Over Polymer Optical Fibers for In-Building Cabling and Home Networking

This paper focuses on high-speed cabling using polymer optical fibers (POF) in home networking. In particular, we report about the results obtained in the POF-ALL European Project, which is relevant to the Sixth Framework Program, and after two years of the European Project POF-PLUS, which is relevant to the Seventh Framework Program, focusing on their research activities about the use of poly-metyl-metha-acrilate step-index optical fibers for home applications. In particular, for that which concerns POF-ALL, we will describe eight-level pulse amplitude modulation (8-PAM) and orthogonal frequency-division multiplexing (OFDM) approaches for 100-Mb/s transmission over a target distance of 300 m, while for that which concerns POF-PLUS, we will describe a fully digital and a mixed analog-digital solution, both based on intensity modulation direct detection, for transmitting 1 Gb/s over a target distance of 50 m. The ultimate experimental results from the POF-ALL project will be given, while for POF-PLUS, which is still ongoing, we will only show our most recent preliminary results

Identifying Social Norms Using Coordination Games: Why Does Dictator Game Sharing Vary?

We introduce an incentivized elicitation method for identifying social norms that uses simple coordination games. We demonstrate that concern for the norms we elicit and for money predict changes in behavior across several variants of the dictator game, including data from a novel experiment and from prior published laboratory studies, that are unaccounted for by most current theories of social preferences. Moreover, we find that the importance of social norm compliance and of monetary considerations is fairly constant across different experiments. This consistency allows prediction of treatment effects across experiments, and implies that subjects have a generally stable willingness to sacrifice money to take behaviors that are socially appropriate.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/98296/1/jeea12006.pd

Cultural Conflict and Merger Failure: An Experimental Approach

We use laboratory experiments to explore merger failure due to conflicting organizational cultures. We introduce a laboratory paradigm for studying organizational culture that captures several key elements of the phenomenon. In our experiments, we allow subjects in "firms" to develop a culture, and then merge two firms. As expected, performance decreases following the merging of two laboratory firms. In addition, subjects overestimate the performance of the merged firm and attribute the decrease in performance to members of the other firm rather than to situational difficulties created by conflicting culture

Seeking the roots of entrepreneurship: Insights from behavioral economics

There is a growing body of evidence that many entrepreneurs seem to enter and persist in entrepreneurship despite earning low risk-adjusted returns. This has lead to attempts to provide explanations—using both standard economic theory and behavioral economics—for why certain individuals may be attracted to such an apparently unprofitable activity. Drawing on research in behavioral economics, in the sections that follow, we review three sets of possible interpretations for understanding the empirical facts related to the entry into, and persistence in, entrepreneurship. Differences in risk aversion provide a plausible and intuitive interpretation of entrepreneurial activity. In addition, a growing literature has begun to highlight the potential importance of overconfidence in driving entrepreneurial outcomes. Such a mechanism may appear at face value to work like a lower level of risk aversion, but there are clear conceptual differences—in particular, overconfidence likely arises from behavioral biases and misperceptions of probability distributions. Finally, nonpecuniary taste-based factors may be important in motivating both the decisions to enter into and to persist in entrepreneurship