Ten isn't large!: Group size and coordination in a large-scale experiment

This paper provides experimental evidence on coordination within genuinely large groups that could proxy the atomistic nature of real-world markets and organizations. We use a bank-run game where the two pure-strategy equilibria "run" and "wait" can be ranked by payoff and risk-dominance and a random sequence of public announcements introduces stochastic sunspot equilibria. We find systematic group size differences that theory fails to predict. In the presence of strategic uncertainty, the behavior of small groups is uninformative of behavior in large groups: in contrast to groups of 10, large groups only coordinate on the safest but Pareto-inferior "run" strategy and never coordinate on sunspots. Our results entail a series of theoretical and experimental implications.