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The problem of maintaining compliance within stable coalitions: experimental evidence

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  • David M. McEvoy
  • James J. Murphy
  • John M. Spraggon
  • John K. Stranlund

Abstract

This study examines the performance of stable cooperative coalitions that form to provide a public good when coalition members have the opportunity to violate 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 are responsible for financing enforcement. However, our experiments reveal that member-financed enforcement of compliance reduces the provision of the public good. The decrease is attributed to an increase in the participation threshold for a stable coalition to form and to significant levels of noncompliance. Provision of the public good increases significantly when we abandon the strict stability conditions and require all subjects to join a coalition for it to form. Copyright 2011 Oxford University Press 2010 All rights reserved, Oxford University Press.

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Article provided by Oxford University Press in its journal Oxford Economic Papers.

Volume (Year): 63 (2011)
Issue (Month): 3 (July)
Pages: 475-498

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Handle: RePEc:oup:oxecpp:v:63:y:2011:i:3:p:475-498
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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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  1. Marks, Melanie & Croson, Rachel, 1998. "Alternative rebate rules in the provision of a threshold public good: An experimental investigation," Journal of Public Economics, Elsevier, vol. 67(2), pages 195-220, February.
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  8. Na Li Dawson & Kathleen Segerson, 2003. "Voluntary Agreements with Industries: Participation Incentives with Industry-wide Targets," Working papers 2004-06, University of Connecticut, Department of Economics.
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  13. Rubio, S. J. & Ulph, A., 2002. "An infinite-horizon model of dynamic membership of international environmental agreements," Discussion Paper Series In Economics And Econometrics 0210, Economics Division, School of Social Sciences, University of Southampton.
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Cited by:

  1. Leo Wangler & Juan-Carlos Altamirano-Cabrera & Hans-Peter Weikard, 2013. "The political economy of international environmental agreements: a survey," International Environmental Agreements- Politics, Law and Economics, Springer, vol. 13(3), pages 387-403, September.
  2. David M. McEvoy & Todd L. Cherry & John K. Stranlund, 2011. "The Endogenous Formation of Coalitions to Provide Public Goods: Theory and Experimental Evidence," Working Papers 2011-2, University of Massachusetts Amherst, Department of Resource Economics.
  3. Federica Alberti & Edward J. Cartwright, 2016. "Full agreement and the provision of threshold public goods," Public Choice, Springer, vol. 166(1), pages 205-233, January.
  4. Dannenberg, Astrid & Lange, Andreas & Sturm, Bodo, 2010. "On the formation of coalitions to provide public goods: Experimental evidence from the lab," ZEW Discussion Papers 10-037, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  5. David McEvoy & Todd Cherry & John Stranlund, 2015. "Endogenous Minimum Participation in International Environmental Agreements: An Experimental Analysis," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 62(4), pages 729-744, December.
  6. David McEvoy & Michael Jones & Michael McKee & John Talberth, 2013. "Incentivizing Cooperative Agreements for Sustainable Forest Management: Experimental Tests of Alternative Structures and Institutional Rules," Working Papers 13-23, Department of Economics, Appalachian State University.
  7. Todd Cherry & David McEvoy, 2013. "Enforcing Compliance with Environmental Agreements in the Absence of Strong Institutions: An Experimental Analysis," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 54(1), pages 63-77, January.

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