October 2008

IZA DP No. 3741: Efficiency Gains from Team-Based Coordination: Large-Scale Experimental Evidence

revised and extended version published in: American Economic Review, 2010, 100 (4), 1892-1912

The need for efficient coordination is ubiquitous in organizations and industries. The literature on the determinants of efficient coordination has focused on individual decision-making so far. In reality, however, teams often have to coordinate with other teams. We present an experiment with 825 participants, using six different coordination games, where either individuals or teams interact with each other. We find that teams coordinate much more efficiently than individuals. This finding adds one important cornerstone to the recent literature on the conditions for successful coordination. We explain the differences between individuals and teams using the experience weighted attraction learning model.