American Economic Review: Vol. 96 No. 1 (March 2006)
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Managing Growth to Achieve Efficient Coordination in Large Groups
Weber, RobertoA. 2006. "Managing Growth to Achieve Efficient Coordination in Large Groups." American Economic Review, 96(1): 114-126.
Previous experiments using the minimum-effort coordination game reveal a striking regularity—large groups never coordinate efficiently. Given the frequency with which large real-world groups, such as firms, face similarly difficult coordination problems, this poses an important question: Why do we observe large, successfully coordinated groups in the real world when they are so difficult to create in the laboratory? This paper presents one reason. The experiments show that, even though efficient coordination does not occur in groups that start off large, efficiently coordinated large groups can be "grown." By starting with small groups that find it easier to coordinate, we can add entrants—who are aware of the group's history—to create efficiently coordinated large groups. This represents the first experimental demonstration of large groups tacitly coordinated at high levels of efficiency.
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Weber, Roberto A.