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Starting small toward voluntary formation of efficient large groups in public goods provision

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  • Charness, Gary
  • Yang, Chun-Lei

Abstract

We test a mechanism whereby groups are formed voluntarily, through the use of voting. These groups play a public-goods game, where efficiency increases with group size (up to a limit, in one treatment). It is feasible to exclude group members, to exit one's group, or to form larger groups through mergers involving the consent of both merging groups. We find a great degree of success for this mechanism, as the average contribution rate is very high. The driving force appears to be the economies of scale combined with the awareness that bad behavior will result in exclusion or no admission. However, an important additional component is that it is possible for previous outsiders to later redeem themselves by becoming high contributors, typically in efficient large groups.

Suggested Citation

  • Charness, Gary & Yang, Chun-Lei, 2014. "Starting small toward voluntary formation of efficient large groups in public goods provision," Journal of Economic Behavior & Organization, Elsevier, vol. 102(C), pages 119-132.
  • Handle: RePEc:eee:jeborg:v:102:y:2014:i:c:p:119-132
    DOI: 10.1016/j.jebo.2014.03.005
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    Cited by:

    1. Abhijit Ramalingam & Brock V. Stoddard & James M. Walker, 2016. "The market for talent: Competition for resources and self governane in teams," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 16-15, School of Economics, University of East Anglia, Norwich, UK..
    2. Jérôme Hergueux & Nicolas Jacquemet & Stéphane Luchini & Jason Shogren, 2016. "Leveraging the Honor Code: Public Goods Contributions under Oath," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01379060, HAL.
    3. Kamei, Kenju, 2016. "Information Disclosure and Cooperation in a Finitely-repeated Dilemma: Experimental Evidence," MPRA Paper 75100, University Library of Munich, Germany.
    4. Marie Claire Villeval, 2017. "Exclusion and reintegration in a social dilemna," Post-Print halshs-01662829, HAL.
    5. repec:eee:eecrev:v:103:y:2018:i:c:p:125-149 is not listed on IDEAS
    6. Herbst, Luisa & Konrad, Kai A. & Morath, Florian, 2015. "Endogenous group formation in experimental contests," European Economic Review, Elsevier, vol. 74(C), pages 163-189.
    7. Elsner, Wolfram, 2017. "Policy and State in Complexity Economics," EconStor Preprints 158766, ZBW - German National Library of Economics.
    8. Strømland, Eirik & Tjøtta, Sigve & Torsvik, Gaute, 2016. "Reciprocity evolving: partner choice and communication in a repeated prisoner’s dilemma," Working Papers in Economics 01/16, University of Bergen, Department of Economics.
    9. repec:spr:sochwe:v:50:y:2018:i:2:d:10.1007_s00355-017-1081-5 is not listed on IDEAS
    10. repec:eee:jeborg:v:147:y:2018:i:c:p:76-94 is not listed on IDEAS
    11. Fehr, Dietmar & Sutter, Matthias, 2016. "Gossip and the Efficiency of Interactions," IZA Discussion Papers 9704, Institute for the Study of Labor (IZA).
    12. Nosenzo, Daniele & Tufano, Fabio, 2017. "The effect of voluntary participation on cooperation," Journal of Economic Behavior & Organization, Elsevier, vol. 142(C), pages 307-319.
    13. Tjaša Bjedov & Simon Lapointe & Thierry Madiès & Marie Villeval, 2018. "Does decentralization of decisions increase the stability of large groups?," Working Papers halshs-01691475, HAL.
    14. Daniele Nosenzo & Fabio Tufano, 2015. "Entry or Exit? The Effect of Voluntary Participation on Cooperation," Discussion Papers 2015-20, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    15. Oprea, Ryan & Charness, Gary & Friedman, Daniel, 2014. "Continuous time and communication in a public-goods experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 108(C), pages 212-223.
    16. Christoph Engel & Bettina Rockenbach, 2014. "Give Everybody a Voice! The Power of Voting in a Public Goods Experiment with Externalities," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2014_16, Max Planck Institute for Research on Collective Goods.
    17. Andrea Robbett, 2016. "Community dynamics in the lab," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 46(3), pages 543-568, March.
    18. James Andreoni & Michael A. Kuhn & Larry Samuelson, 2016. "Starting Small: Endogenous Stakes and Rational Cooperation," NBER Working Papers 21934, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Economies of scale; Exclusion; Exit; Experiment; Merger; Public goods; Redemption; Social efficiency; Voluntary group formation; Voting;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • B49 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Other
    • C79 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Other
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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