Incentives, group pride, and real effort in the weak-link game: An experimental analysis

This dissertation aims to test, in a controlled laboratory setting, the role of dierent types of both monetary and non-monetary incentives in coordination. Although complexity and task interdependence have rapidly grown, organizations have often overlooked the importance of integrating specialized activities, hence causing organizations to drift into, or stay locked in, inecient equilibria for a wide range of coordination problems. I adopted an experimentally-grounded approach to organizational design which has long been neglected by both economics and management scholars, and in an attempt to enhance the generalizability of the results to actual organizations, I carried out a series of experiments in which real-eort tasks are implemented. The present dissertation is organized as follows: Chapter 1 and 2 critically review the relevant literature on coordination games and real effort in laboratory experiments, respectively. Chapter 3 compares individual and group-based incentives in a real-eort coordination game. In line with some empirical evidence on actual organizations, group-based payments work as good as, and in some cases outperform, individual-based payments. Chapter 4 tests the impact of group pride on coordination. I found a large and statistically signicant eect of information about ranking and matching procedure on coordination. Chapter 5 test the robustness of group pride across dierent tasks. Quite surprisingly, group pride induced by a task related to the one used in the coordination phase was not eective, while group pride induced by an unrelated task was eective in enhancing coordination among top performers.