American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Ten Isn't Large! Group Size and Coordination in a Large-Scale Experiment
American Economic Journal: Microeconomics
vol. 15,
no. 1, February 2023
(pp. 580–617)
Abstract
We provide experimental evidence on coordination within large groups that could proxy the atomistic nature of real-world markets. We use a bank run game where the two pure-strategy equilibria can be ranked by payoff and risk dominance and a sequence of public announcements introduces stochastic sunspot equilibria. We find systematic group size effects that theory fails to predict. When the payoff-dominant strategy is risky enough, the behavior of small groups is uninformative of the behavior in large groups: unlike smaller groups of size ten, larger groups exclusively coordinate on the Pareto-inferior strategy and never coordinate on sunspots.Citation
Arifovic, Jasmina, Cars Hommes, Anita Kopányi-Peuker, and Isabelle Salle. 2023. "Ten Isn't Large! Group Size and Coordination in a Large-Scale Experiment." American Economic Journal: Microeconomics 15 (1): 580–617. DOI: 10.1257/mic.20200290Additional Materials
JEL Classification
- C92 Design of Experiments: Laboratory, Group Behavior
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
- G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages