*The alphabetical ordering of the authors denotes equal co-authorship. We gratefully

We present an experiment investigating the effects of having an individual identified as a singleton group. The presence of a singleton group reduces trustworthiness. The majority group members discriminate against the singled out group member when they are not responsible of the distinct status of this person. When the singleton group member is identified based on negative characteristics, he or she returns significantly less. Overall, having singleton groups has no benefits for trust and is potentially disruptive for trustworthiness. JEL classification codes

Prior experimental evidence finds decentralized pre-play communication to facilitate efficient coordination among interdependent agents. However, the kind of communication in these experiments is unrealistic for most organizational contexts, as it consists of costless messages from every agent, which are sent every time a coordination game is played. We study how communication use and its effectiveness change when one considers that sending messages is often both costly and voluntary, and investigate the effectiveness of alternative communication policies employed by a firm. The policies differ in the degree to which message use is voluntary and in who bears the costs for communication. Imposing even small communication costs on employees dramatically reduces message use, but efficient coordination occurs more frequently when the proportion of message costs borne by employees is small. We conclude that under certain conditions, large but incomplete subsidies for using communication can be an optimal solution for obtaining efficient coordination in firms.

Abstract: The hold-up problem has played a central role in the study of firm boundaries, which is a fundamental element of the economic study of organizations. We study a previously unexplored mechanism by which integration between two parties could resolve the problem. Based on the social identity theory, we conjecture that group identity strengthens agents ’ altruistic preferences towards group members, and this helps resolve the hold-up problem. We test this conjecture in a laboratory experiment. Our subjects were randomly divided into two teams and asked to wear their team uniform. Task 1 required them to answer questions about trivia, where the subjects had access to a chat program that enabled them to help their team members. For Task 2, the subjects played a hold-up game with either a member of their own team (representing integration) or a member of the other team (non-integration). The experimental results support our conjectures.

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