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The Problem of Maintaining Compliance within Stable Coalitions: Experimental Evidence

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Author Info
David M. McEvoy () (Department of Economics, Appalachian State University, Boone, NC)
James J. Murphy () (Department of Economics, University of Alaska Anchorage, Anchorage, AK)
John M. Spraggon () (Department of Resource Economics, University of Massachusetts Amherst)
John K. Stranlund () (Department of Resource Economics, University of Massachusetts Amherst)

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Abstract

This study examines the performance of stable cooperative coalitions that form to provide a public good when coalition members have the opportunity to not comply with their commitments. A stable coalition is one in which no member wishes to leave and no non-member wishes to join. To counteract the incentive to violate their commitments, coalition members fund a third-party enforcer. This leads to the theoretical conclusion that stable coalitions are larger (and provide more of a public good) when their members must finance enforcement relative to when compliance is ensured without the need for costly enforcement. However, our experiments reveal that giving coalition members the opportunity to violate their commitments while requiring them to finance enforcement to maintain compliance reduces the overall provision of the public good. The decrease in the provision of the public good is attributed to an increase in the participation threshold for a theoretically stable coalition to form and to significant levels of noncompliance. When we abandon the strict stability conditions and require all subjects to join a coalition for it to form, the average provision of the public good increases significantly.

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File URL: http://courses.umass.edu/resec/workingpapers/documents/ResEcWorkingPaper2008-2.pdf
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Publisher Info
Paper provided by University of Massachusetts Amherst, Department of Resource Economics in its series Working Papers with number 2008-2.

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Length: 65 pages
Date of creation: Jul 2008
Date of revision:
Handle: RePEc:dre:wpaper:2008-2

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Related research
Keywords: stable coalitions; self-enforcing agreements; compliance; enforcement; public goods;

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Find related papers by JEL classification:
H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Alistair Ulph, 2004. "Stable International Environmental Agreements with a Stock Pollutant, Uncertainty and Learning," Journal of Risk and Uncertainty, Springer, vol. 29(1), pages 53-73, 07. [Downloadable!]
  2. David McEvoy & John Stranlund, 2009. "Self-enforcing International Environmental Agreements with Costly Monitoring for Compliance," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 42(4), pages 491-508, April. [Downloadable!] (restricted)
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