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Output Sharing Among Groups Exploiting Common Pool Resources

Author

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  • Stephan Schott
  • Neil Buckley
  • Stuart Mestelman
  • R. Andrew Muller

Abstract

Many economic decisions are susceptible to either free-riding, or excessive rivalry or overextraction. Equally sharing output in partnerships introduces a free-riding incentive which may offset the latter. We conduct a laboratory experiment to assess the performance of output sharing in partnerships by introducing equal-sharing subgroups of size one, four and six into a twelve-person common pool resource (CPR) environment. Group members are either unchanging throughout a 15 period session (the partners treatment), or randomly reassigned each decision round (the strangers treatment). Group size significantly affects effort. Aggregate effort reflects the Nash equilibrium predictions. The first best solution is achieved when resource users are privately extracting from the CPR and equally sharing their output with the socially optimal number of partners. The strangers treatment does not significantly affect aggregate effort. Total payoff distribution, however, is more equitable for strangers than for partners.

Suggested Citation

  • Stephan Schott & Neil Buckley & Stuart Mestelman & R. Andrew Muller, 2004. "Output Sharing Among Groups Exploiting Common Pool Resources," McMaster Experimental Economics Laboratory Publications 2004-05, McMaster University.
  • Handle: RePEc:mcm:mceelp:2004-05
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    References listed on IDEAS

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    1. Chan, Kenneth S. & Godby, Rob & Mestelman, Stuart & Andrew Muller, R., 2002. "Crowding-out voluntary contributions to public goods," Journal of Economic Behavior & Organization, Elsevier, pages 305-317.
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    6. Isaac, R Mark & Walker, James M, 1988. "Communication and Free-Riding Behavior: The Voluntary Contribution Mechanism," Economic Inquiry, Western Economic Association International, vol. 26(4), pages 585-608, October.
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    8. Andreoni, James & Croson, Rachel, 2008. "Partners versus Strangers: Random Rematching in Public Goods Experiments," Handbook of Experimental Economics Results, Elsevier.
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    Cited by:

    1. Martin D. Heintzelman & Stephen W. Salant & Stephan Schott, 2005. "Partnerships: A Potential Solution to the Common-Property Problem but a Problem for a Antitrust Authorities," Levine's Working Paper Archive 784828000000000040, David K. Levine.
    2. Matthew J. Baker & Kurtis Swope, 2004. "Sharing, Gift-Giving, and Optimal Resource Use Incentives in Hunter-Gatherer Society," Departmental Working Papers 8, United States Naval Academy Department of Economics.

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