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Splitting leagues: promotion and demotion in contribution-based regrouping experiments

Author

Listed:
  • Susana Cabrera

    ()

  • Enrique Fatás

    ()

  • Juan Lacomba

    ()

  • Tibor Neugebauer

    ()

Abstract

The paper reports an experimental study on a promotion-demotion mechanism to mitigate the free-rider problem in a voluntary contribution setting. The mechanism hierarchically splits a group in two; we refer to one subgroup as the Major league and to the other as the minor league. The most cooperative subject of the minor league is switched with the least cooperative subject in the Major league. The results reveal a significant increase of cooperation levels in both leagues relative to the standard voluntary contribution mechanism. We argue that a lack of sequentially-rational beliefs about continuation payoffs in Major and minor leagues leads to higher equilibrium contributions. The data suggest beyond that, the promotion-demotion mechanism regroups subjects deliberately according to their cooperativeness. Copyright Economic Science Association 2013

Suggested Citation

  • Susana Cabrera & Enrique Fatás & Juan Lacomba & Tibor Neugebauer, 2013. "Splitting leagues: promotion and demotion in contribution-based regrouping experiments," Experimental Economics, Springer;Economic Science Association, vol. 16(3), pages 426-441, September.
  • Handle: RePEc:kap:expeco:v:16:y:2013:i:3:p:426-441
    DOI: 10.1007/s10683-012-9346-4
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Andrej Angelovski & Tibor Neugebauer & Maroš Servatka, 2017. "Can Rank-Order Competition Resolve the Free-Rider Problem in the Voluntary Provision of Impure Public Goods? Experimental Evidence," Working Papers CESARE 1705, Dipartimento di Economia e Finanza, LUISS Guido Carli.
    2. Sheremeta, Roman, 2015. "Behavior in Group Contests: A Review of Experimental Research," MPRA Paper 67515, University Library of Munich, Germany.
    3. Croson, Rachel & Fatas, Enrique & Neugebauer, Tibor & Morales, Antonio J., 2015. "Excludability: A laboratory study on forced ranking in team production," Journal of Economic Behavior & Organization, Elsevier, vol. 114(C), pages 13-26.
    4. David J. Freeman & Erik O. Kimbrough & Garrett M. Petersen & Hanh T. Tong, 2017. "Instructions," Discussion Papers dp17-12, Department of Economics, Simon Fraser University.

    More about this item

    Keywords

    Experiment; Group incentives; Organization design; C92; H41; J33; J4;

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J4 - Labor and Demographic Economics - - Particular Labor Markets

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