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Does Decentralization of Decisions Increase the Stability of Large Groups?

Author

Listed:
  • Bjedov, Tjaša

    () (Distance Learning University of Switzerland)

  • Lapointe, Simon

    () (VATT, Helsinki)

  • Madies, Thierry

    () (University of Fribourg)

  • Villeval, Marie Claire

    () (CNRS, GATE)

Abstract

Using a laboratory experiment with nested local and global public goods, we analyze the stability of global groups when individuals have the option to separate, according to the degree of decentralization of decision-making. We show that increasing the number of decisions made at the local level within a smaller group reduces the likelihood that individuals vote in favor of a break-up of the global group. Voting for a break-up of the global group is more likely when global group members are less cooperative and local group members are more cooperative. Reinforcing local group identity has no impact on votes.

Suggested Citation

  • Bjedov, Tjaša & Lapointe, Simon & Madies, Thierry & Villeval, Marie Claire, 2018. "Does Decentralization of Decisions Increase the Stability of Large Groups?," IZA Discussion Papers 11364, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp11364
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    Keywords

    break-up of groups; decision rights; voting behavior; public goods; experiment;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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