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Entry or Exit? The Effect of Voluntary Participation on Cooperation

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  • Daniele Nosenzo

    (Department of Economics, University of Nottingham.)

  • Fabio Tufano

    (Department of Economics, University of Nottingham.)

Abstract

We study the effects of voluntary participation on public good provision. Voluntary participation may foster cooperation through two mechanisms: an entry mechanism, which leads to assortative selection of interaction partners, or an exit mechanism, whereby the opportunity to leave the partnership can be used as a means to resist exploitation by free-riders. We examine the relative effectiveness of these two mechanisms in a one-shot, two-person public goods game experiment. We find that voluntary participation has a positive effect on public good provision through the exit mechanism, but we do not find evidence of a positive effect of entry. Assortative selection of interaction partners seems to play a minor role in our setting, whereas the threat of costly exit is a powerful force to discipline free-riding.

Suggested Citation

  • Daniele Nosenzo & Fabio Tufano, 2015. "Entry or Exit? The Effect of Voluntary Participation on Cooperation," Discussion Papers 2015-04, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    • Handle: RePEc:not:notcdx:2015-04
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    Keywords

    public goods; cooperation; voluntary participation; exit; entry; experiment;
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