The effect of intergroup competition on group coordination: an experimental study

We studied the effect of intergroup competition on behavior in the minimal-effort game (Van Huyck et al. 1990. Amer. Econ. Rev. 80, 234–248). The group with the higher minimum won the competition and its members were paid according to the game’s payoff matrix. The members of the losing group were paid nothing. We found that intergroup competition improved collective efficiency as compared with single-group control treatments where each group played an independent coordination game (either with or without information about the minimum chosen by the outgroup). We then studied another intergroup competition treatment in which the members of both groups were paid according to the original payoff matrix, and, in addition, each member of the winning group was paid an extra flat bonus. We found that this milder type of intergroup competition also led to better group coordination than in the single-group case.  2002 Elsevier Science (USA). All rights reserved. JEL classification: C70; C92