Gradualism in Coordination and Trust Building

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Gradualism in Coordination and Trust Building

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Title: Gradualism in Coordination and Trust Building
Author: Ye, Maoliang
Citation: Ye, Maoliang. 2012. Gradualism in Coordination and Trust Building. Doctoral dissertation, Harvard University.
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Abstract: Coordination and cooperation on public projects, as well as trust among society members are important for economic, social and political activities. This dissertation presents essays on the role of gradualism - increasing the stakes of projects slowly over time rather than starting with large-stake projects immediately - in coordination and trust building under various settings. The first two essays are on simultaneous coordination games when there are multiple equilibria in the one-shot game; the third essay is on sequential trust games when the only subgame perfect equilibrium in the one-shot game predicts that no cooperation occurs at all. The first essay, One Step at A Time: Does Gradualism Build Coordination? (joint with Sam Asher, Lorenzo Casaburi, and Plamen Nikolov), uses a multiple-period binarychoice weakest-link coordination experiment and finds that gradualism leads to better coordination in high-stake projects. The findings point to a voluntary mechanism to promote coordination when the capacity to impose sanctions is limited. This second essay, Gradualism, Weakest Link and Information: Theory and Coordination Experiments, extends the first essay and compares the effects of gradualism under various information and payoff structures. It proposes a belief-based learning framework to explore why and when gradualism may help coordination. It compares the role of gradualism in two weakest-link games under two different information structures: a limited information structure when subjects are only informed whether all group members contribute, and a richer information structure when they are informed exactly how many group members contribute. It finds that richer information feedback facilitates later coordination for the big-bang approach when a group is close to success, thus shrinking the advantage of gradualism. Finally, in a third experiment it finds that allowing free riding worsens coordination in all treatments, and gradualism with imperfect monitoring does not perform better. The third essay, Does Gradualism Build Trust? Evidence from A Multi-round Experiment, examines the effect of gradualism in trust building using a multi-round binarychoice trust (investment) experiment. It finds that gradualism leads to higher trustworthiness at the beginning and higher subsequent trust. However, trustworthiness and trust for all treatments sharply decrease in the end; even gradualism cannot avoid this end-of-game effect.
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