Coordination and Cooperation Problems in Network Good Production

Antonie Knigge,Vincent Buskens

doi:10.3390/g1040357

Abstract

If actors want to reach a particular goal, they are often better off forming collaborative relations and investing together rather than investing separately. We study the coordination and cooperation problems that might hinder successful collaboration in a dynamic network setting. We develop an experiment in which coordination problems are mainly due to finding partners for collaboration, while cooperation problems arise at the investment levels of partners who have already agreed to collaborate. The results show that as costs of forming links increase, groups succeed less often in solving the coordination problem. Still, if subjects are able to solve the coordination problem, they invest in a suboptimal way in the network good. It is mostly found that if cooperation is successful in terms of investment, it is due to subjects being able to monitor how much their partners invest. Moreover, subjects deal better with the coordination and cooperation problems as they gain experience.

Highlights

If actors want to reach a particular goal, they are often better off forming collaborative relations and investing together rather than each trying to reach the goal individually
Since other networks than the empty and the complete network are observed so rarely, we decided to collapse them into one category “Other.” We distinguish between groups where subjects implement Nash investments (Nash), groups where subjects cooperate (Coop), and a rest category for all other investment profiles (Rest)
We looked at a small piece of this puzzle by studying the coordination and cooperation problems that hinder actors in successfully creating collaborative relations to jointly produce—what we have labeled—a network good with complementarities

Summary

Introduction

If actors want to reach a particular goal, they are often better off forming collaborative relations and investing together rather than each trying to reach the goal individually. We study situations in which actors look for relations with others to produce what we label a “network good with complementarities.”. A network good is a special form of a collective good. A classic collective good is characterized by non-excludability: the contribution of one benefits the whole group [1,2]. For a network good, non-excludability only takes place within social relations [3]. A network good with complementarities has the characteristic that the investments in this good made by actors become more beneficial when these actors are linked to others who invest [4]. Combining the expertise of one with the know-how of another can lead to a pool of knowledge that is worth more than the sum of its uncombined parts

Methods

Results

Conclusion