Creating Expectational Assets in the Laboratory: Coordination in 'Weakest- Link' Games

Abstract

We study coordination games with multiple equilibria, in which players are penalized for picking numbers higher than the minimum anybody picks, and everyone prefers a larger minimum. 'Weakest-link' games like this model organizational situations in which the worst component of a product or process determines its overall quality. In experimental groups, the best equilibrium was reached infrequently. Aggregating two groups into a larger one always hurt. We argue that players' beliefs about what the minimum will be are an 'expectational asset' (or liability) which is socially complex, linking organization-level behavior and the resource-based view of the firm.

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