The problem of maintaining compliance within stable coalitions: experimental evidence
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.
|Date of creation:||Jan 2010|
|Publication status:||Forthcoming in Oxford Economic Papers.|
|Contact details of provider:|| Web page: http://www.cbpp.uaa.alaska.edu/CBPPHome/DepartmentsandMajors/Economics.aspx|
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