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The problem of maintaining compliance within stable coalitions: experimental evidence

  • David M. McEvoy

    ()

    (Department of Economics, Appalachian State University)

  • James J. Murphy

    ()

    (Department of Economics, University of Alaska Anchorage)

  • John M. Spraggon

    ()

    (Department of Resource Economics, University of Massachusetts Amherst)

  • John K. Stranlund

    ()

    (Department of Resource Economics, University of Massachusetts Amherst)

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.

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File URL: http://www.econpapers.uaa.alaska.edu/RePEC/ala/wpaper/ALA201002.pdf
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Paper provided by University of Alaska Anchorage, Department of Economics in its series Working Papers with number 2010-02.

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Date of creation: Jan 2010
Date of revision:
Publication status: Forthcoming in Oxford Economic Papers.
Handle: RePEc:ala:wpaper:2010-02
Contact details of provider: Web page: http://www.cbpp.uaa.alaska.edu/CBPPHome/DepartmentsandMajors/Economics.aspx

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