Information Targeting and Coordination: An Experimental Study

In this study we explore the role of information targeting and its effect on coordination in a multi-threshold public goods game. We consider four treatments, three in which we give feedback about other members‟ contributions to a subsample of group members and another treatment in which feedback is not provided at all. Our three information treatments vary in whom receives the information, which can be given randomly, to those whose contributions are below the average of their group, or to those whose contributions are above the average of their group. Results show improvements in coordination when information targeting is used, resulting in an increased allocation to the public good. In contrast, providing information randomly does not improve cooperation and coordination in a higher quality good as compared to the no information treatment. Moreover, randomly information strategy eventually degrades towards free-riding over time. Our random information treatment approximates strategies currently used in practice for educating consumers about digital piracy, as well as other situations where information targeting may be useful. Our findings provide insights that may be used in practice to develop consumer education and marketing strategies for reducing the digital piracy problem. The implications of this research may also be employed by management in other contexts where positively or negatively affecting coordination between consumers is of interest. Acknowledgements: The authors thank Timothy Cason, Stephen Martin, and participants of the Vernon Smith Experimental Economics Workshop at Purdue University, as well as seminar participants at the University of Arizona for their helpful comments and suggestions.