Economic Coordination under Time Pressure: Evidence from Experiments

Institution: VCEE

Funding agency: Heinrich Graf Hardegg’sche Stiftung

Amount: Euro 7’500

Period: January 2016 – December 2017

Investigators: Axel Sonntag (VCEE)

Short description:

Many if not most important economic situations involve some kind of time pressure, either in the form of explicit and fixed deadlines or because time is money. In this project we consider the role of time pressure for interactive situations that involve an essential element of coordination. 

We are interested in the following questions: Will increased time pressure affect the likelihood that a coordinated agreement will be reached, and what kind of agreement, if any, is reached?  The first of these questions is related to the efficiency implications of increased time pressure; the second concerns the nature of the division of the surplus. One possibility that we are especially interested in investigating is whether people may become more likely to reach a coordinated outcome the less time they have available. This could happen because higher time pressure affects the kind of reasoning decision makers engage in. For example, a tight deadline might make decision makers more likely to select a fair outcome that gives equal money earnings (see Rand, Greene, & Nowak, 2012 for a public goods game setting), rather than end up in a dispute over outcomes that offer unequal money payments and are preferred by different players. 

Since it is very hard to vary deadlines in real situations, or to get natural data from cases where the deadline was varied, we will pursue an experimental approach. This has the advantage that we can collect data from a controlled environment, where we can vary the kind of time pressure faced by the decision makers and study its impact on behavior.