nep-mfd New Economics Papers
on Microfinance
Issue of 2013‒01‒12
one paper chosen by
Olivier Dagnelie
Instituto de Analisis Economico, CSIC

  1. You Can’t Put Old Wine in New Bottles: The Effect of Newcomers on Coordination in Groups By McCarter, Matthew; Sheremeta, Roman

  1. By: McCarter, Matthew; Sheremeta, Roman
    Abstract: A common finding in social sciences is that member change hinders group functioning and performance. However, questions remain as to why member change negatively affects group performance and what are some ways to alleviate the negative effects of member change on performance? To answer these questions we conduct an experiment in which we investigate the effect of newcomers on a group’s ability to coordinate efficiently. Participants play a coordination game in a four-person group for the first part of the experiment, and then two members of the group are replaced with new participants, and the newly formed group plays the game for the second part of the experiment. Our results show that the arrival of newcomers decreases trust among group members and this decrease in trust negatively affects group performance. Knowing the performance history of the arriving newcomers mitigates the negative effect of their arrival, but only when newcomers also know the oldtimers performance history. Surprisingly, in groups that performed poorly prior to the newcomers’ arrival, the distrust generated by newcomers is mainly between oldtimers about each other rather than about the newcomers.
    Keywords: coordination; group performance; oldtimers; newcomers; trust; experiments
    JEL: C72 C91
    Date: 2013–01–02
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:43532&r=mfd

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