Cheap Talk and Coordination in the Lab and in the Field: Collective Commercialization in Senegal

Abstract

the Workshop in Memory of John van Huyck, and the Workshop on Producers' Organizations in Agricultural Markets at Toulouse Economics for helpful comments. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

Investigating the Inclusive-Performance Tradeoff in Agricultural Cooperatives: Evidence from Nepal

“…When a larger number of members participate in cooperative activities, the organization's bargaining power increases by pooling more inputs. Additionally, transaction costs increase as the number of participating members increases, making coordination among larger groups more difficult (Aflagah et al, 2019). The share of cooperative members that currently have a loan outstanding is also a source of inclusion and may affect the cooperative's performance.…”

“…However, studies on this topic have largely focused on cooperative membership as the source of inclusion, overlooking the extent to which existing members are included in group activities. This is an important distinction since cooperative members participate to varying degrees (Fischer & Qaim, 2014) and the number of members that are included in a given activity can improve the bargaining position of the cooperative (Aflagah et al, 2019).…”

“…In particular, cooperatives must decide which existing members should be included in group activities, a decision that directly influences the inclusion of individual members and may indirectly influence the market performance of the cooperative overall. This concept is highlighted by Aflagah et al (2019), who argue that organizing bulk sales of members' output can be viewed as a critical mass coordination game, in which a larger number of participants can improve the bargaining position of the cooperative by increasing the quantity of marketable output. Importantly, the marginal benefit of including an additional member in group activities is coupled with increasing transaction costs and strategic uncertainty, making coordination more difficult (Aflagah et al, 2019).…”

“…This concept is highlighted by Aflagah et al (2019), who argue that organizing bulk sales of members' output can be viewed as a critical mass coordination game, in which a larger number of participants can improve the bargaining position of the cooperative by increasing the quantity of marketable output. Importantly, the marginal benefit of including an additional member in group activities is coupled with increasing transaction costs and strategic uncertainty, making coordination more difficult (Aflagah et al, 2019). Therefore the net benefits of including a larger proportion of cooperative members in a given activity are ambiguous and depend on how well the organization is able to manage coordination with larger group sizes.…”

Technological innovation, food safety and economic development in lower middle-income countries

“…More members in a group also imply that more information is available to the members. However, a large group may increase coordination costs, thus reducing the trust levels among group members(Aflagah, Bernard, and Viceisza 2019;Poteete and Ostrom 2004). Low levels of trust among members may reduce the effectiveness of information sharing among the members.…”