Choosing the Stick or the Carrot? Endogenous Institutional Choice in Social Dilemma Situations
We analyse an experimental public goods game in which group members can endogenously determine whether they want to supplement a standard voluntary contribution mechanism with the possibility of rewarding or punishing other group members. We find a large and positive effect of endogenous institutional choice on the level of cooperation in comparison to exogenously implemented institutions. This suggests that democratic participation rights enhance cooperation in groups. With endogenous choice, groups typically vote for the reward option, even though punishment is actually more effective in sustaining high levels of cooperation. Our results are evaluated against the predictions of social preference models.
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f9bbc06f-0d3d-41a7-8513-1, Tilburg University, School of Economics and Management.
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Royal Holloway, University of London: Discussion Papers in Economics
04/05, Department of Economics, Royal Holloway University of London, revised Apr 2004.
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- Casari, Marco & Plott, Charles R., 2003. "Decentralized management of common property resources: experiments with a centuries-old institution," Journal of Economic Behavior & Organization, Elsevier, vol. 51(2), pages 217-247, June.
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