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Growing Groups, Cooperation, and the Rate of Entry

Author

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  • Eva Ranehill
  • Frédéric Schneider
  • Roberto A. Weber

Abstract

We study the stability of voluntary cooperation in response to varying rates at which a group grows. Using a laboratory public-good game with voluntary contributions and economies of scale, we construct a situation in which expanding a group’s size yields potential efficiency gains, but only if the group overcomes the challenge that growth poses for sustained cooperation. We then study the effect on cooperation of exogenously varying rates of entry. Slow growth yields higher cooperation rates and welfare than fast growth, both for incumbents and entrants. This is consistent with slow growth allowing the persistence of optimistic self-reinforcing beliefs. We also study growth rates determined by incumbent group members. While such endogenous growth generally also produces high cooperation levels, growth stalls at intermediate group sizes, leaving potential efficiency gains from growth unrealized.

Suggested Citation

  • Eva Ranehill & Frédéric Schneider & Roberto A. Weber, 2014. "Growing Groups, Cooperation, and the Rate of Entry," CESifo Working Paper Series 4719, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_4719
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    File URL: https://www.cesifo-group.de/DocDL/cesifo1_wp4719.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Peter H. Kriss & Roberto Weber, 2013. "Organizational formation and change: lessons from economic laboratory experiments," Chapters, in: Anna Grandori (ed.), Handbook of Economic Organization, chapter 14, Edward Elgar Publishing.
    2. Jan Schmitz, 2019. "When Two Become One: How Group Mergers Affect Solidarity," Games, MDPI, Open Access Journal, vol. 10(3), pages 1-42, July.

    More about this item

    Keywords

    voluntary cooperation; experiment; public good game; endogenous growth;

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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