Highly flexible neighborhood promotes efficient coordination: Experimental evidence

We experimentally investigate group effort-coordination games where individuals are occasionally offered opportunities to alter their interaction neighborhood (with whom they want to connect and interact). We vary the neighborhood flexibility, or the rate with which such opportunities arise. We find...

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Bibliographic Details
Published in:European economic review 2020-10, Vol.129, p.103521, Article 103521
Main Authors: Riyanto, Yohanes E., Teh, Tat-How
Format: Article
Language:English
Subjects:
Average effort
Centralization
Efficient coordination
Neighborhood choice
Social network
Social networks
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Summary:We experimentally investigate group effort-coordination games where individuals are occasionally offered opportunities to alter their interaction neighborhood (with whom they want to connect and interact). We vary the neighborhood flexibility, or the rate with which such opportunities arise. We find that increasing neighborhood flexibility significantly improves coordination efficiency when players start with a decentralized circle-shaped network, but the improvement is limited if they start with a highly centralized star-shaped network. Neighborhood flexibility improves coordination through facilitating assortative matching among high-effort players. In star-shaped networks, neighborhood flexibility has a side-effect of decentralizing the networks which weakens the central player’s ability in facilitating coordination hence partially offsets the benefit from assortative matching.
ISSN:0014-2921
1873-572X
DOI:10.1016/j.euroecorev.2020.103521