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The Problem of Maintaining Compliance within Stable Coalitions: Experimental Evidence

Author

Listed:
  • David M. McEvoy

    (Department of Economics, Appalachian State University, Boone, NC)

  • James J. Murphy

    (Department of Economics, University of Alaska Anchorage, Anchorage, AK)

  • John M. Spraggon

    (Department of Resource Economics, University of Massachusetts Amherst)

  • John K. Stranlund

    (Department of Resource Economics, University of Massachusetts Amherst)

Abstract

This study examines the performance of stable cooperative coalitions that form to provide a public good when coalition members have the opportunity to not comply with 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 must finance enforcement relative to when compliance is ensured without the need for costly enforcement. However, our experiments reveal that giving coalition members the opportunity to violate their commitments while requiring them to finance enforcement to maintain compliance reduces the overall provision of the public good. The decrease in the provision of the public good is attributed to an increase in the participation threshold for a theoretically stable coalition to form and to significant levels of noncompliance. When we abandon the strict stability conditions and require all subjects to join a coalition for it to form, the average provision of the public good increases significantly.

Suggested Citation

  • David M. McEvoy & James J. Murphy & John M. Spraggon & John K. Stranlund, 2008. "The Problem of Maintaining Compliance within Stable Coalitions: Experimental Evidence," Working Papers 2008-2, University of Massachusetts Amherst, Department of Resource Economics.
    • Handle: RePEc:dre:wpaper:2008-2
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    Cited by:

    1. Astrid Dannenberg & Andreas Lange & Bodo Sturm, 2010. "On the Formation of Coalitions to Provide Public Goods - Experimental Evidence from the Lab," NBER Working Papers 15967, National Bureau of Economic Research, Inc.
    2. David M. McEvoy & John K. Stranlund, 2016. "Inequality Aversion and Coalition Formation," Working Papers 16-09, Department of Economics, Appalachian State University.
    3. Heyen, Daniel & Tavoni, Alessandro, 2024. "Strategic dimensions of solar geoengineering: Economic theory and experiments," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 112(C).
    4. Astrid Dannenberg & Carlo Gallier, 2020. "The choice of institutions to solve cooperation problems: a survey of experimental research," Experimental Economics, Springer;Economic Science Association, vol. 23(3), pages 716-749, September.
    5. Dannenberg, Astrid & Gallier, Carlo, 2019. "The choice of institutions to solve cooperation problems: A survey of experimental research," ZEW Discussion Papers 19-021, ZEW - Leibniz Centre for European Economic Research.
    6. McEvoy, David M. & Cherry, Todd L. & Stranlund, John K., "undated". "The Endogenous Formation of Coalitions to Provide Public Goods: Theory and Experimental Evidence," Working Paper Series 102265, University of Massachusetts, Amherst, Department of Resource Economics.
    7. Luigi Butera & Philip J Grossman & Daniel Houser & John A List & Marie Claire Villeval, 2020. "A New Mechanism to Alleviate the Crises of Confidence in Science With An Application to the Public Goods GameA Review," Working Papers halshs-02512932, HAL.
    8. Chávez, Carlos A. & Murphy, James J. & Quezada, Felipe J. & Stranlund, John K., 2023. "The endogenous formation of common pool resource coalitions," Journal of Economic Behavior & Organization, Elsevier, vol. 211(C), pages 82-102.
    9. Todd Cherry & David McEvoy, 2013. "Enforcing Compliance with Environmental Agreements in the Absence of Strong Institutions: An Experimental Analysis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 54(1), pages 63-77, January.
    10. Luigi Butera & Philip Grossman & Daniel Houser & John List & Marie-Claire Villeval, 2020. "A New Mechanism to Alleviate the Crises of Confidence in Science - With an Application to the Public Goods Game," Artefactual Field Experiments 00684, The Field Experiments Website.
    11. 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.
    12. Astrid Dannenberg & Carlo Gallier, 2019. "The Choice of Institutions to Solve Cooperation Problems: A Survey of Experimental Research," MAGKS Papers on Economics 201911, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    13. Irene Maria Buso & Daniela Di Cagno & Werner Gueth & Lorenzo Spadoni, 2024. "Voluntary Partnerships For Equally Sharing Contribution Costs - Theoretical Aspects and Experimental Evidence," Discussion Papers 2024/309, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    14. 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.
    15. Detemple, Julian & Kosfeld, Michael, 2023. "Fairness and Inequality in Institution Formation," IZA Discussion Papers 16464, Institute of Labor Economics (IZA).
    16. McEvoy, David & Jones, Michael & McKee, Michael & Talberth, John, 2014. "Incentivizing cooperative agreements for sustainable forest management," Forest Policy and Economics, Elsevier, vol. 44(C), pages 34-41.
    17. Valentina Bosetti & Melanie Heugues & Alessandro Tavoni, 2017. "Luring others into climate action: coalition formation games with threshold and spillover effects," Oxford Economic Papers, Oxford University Press, vol. 69(2), pages 410-431.
    18. David McEvoy & Todd Cherry & John Stranlund, 2015. "Endogenous Minimum Participation in International Environmental Agreements: An Experimental Analysis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(4), pages 729-744, December.
    19. 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.
    20. Eichner, Thomas & Kollenbach, Gilbert, 2022. "Environmental agreements, research and technological spillovers," European Journal of Operational Research, Elsevier, vol. 300(1), pages 366-377.

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    Keywords

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    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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