Heterogeneity, coordination and competition: the distribution of individual preferences in organisations

Abstract This paper experimentally investigates how inter- and intragroup heterogeneity (related to individual cooperative preferences) influences intergroup coordination. Coordination incentives are implemented through an rank-order competition. A pre-competition phase determines is distributed across groups within organisation. Two treatments compared: a horizontal-heterogeneity treatment ( H-Hetero , baseline), where differences randomly between groups, vertical-heterogeneity V-Hetero ), in which internally homogeneous but differ considerably from each other. In contrast expectations, I find that vertical (intergroup) heterogeneity, when being accompanied by homogeneity, does not reduce the ability of coordinate keeps overall performance at very high levels. Indeed, subjects react more strongly coordination/competition vertically heterogenous organisations. Further analysis suggests group dynamics mainly driven positive orientation towards inequality (distributional members initially least their non-conditional behaviour. These results have implications for design group-based governance organisations societies.