Can loss framing improve coordination in the minimum effort game?

Abstract

I study how framing payoffs as losses affects group coordination using the minimum effort game. The previous literature shows groups as small as four have a difficult time coordinating on an efficient outcome, even in the presence of higher payoffs for more efficient outcomes. Though penalties for inefficient coordination behavior have been studied in a variety of contexts, the role of losses on coordination behavior has not. Loss framing has been shown to induce more efficient actions in a variety of other areas, since individuals tend to be more sensitive to losses than gains. I examine the framing effect of losses, specifically if framing payoffs as losses can lead to payoff-dominant coordination, using three treatments. These treatments help tease out the effects and dynamics of coordination behavior when payoffs are framed as losses. I find that framing payoffs as losses leads to improvements in coordination, demonstrating the robustness of loss framing in the setting of the minimum effort game.