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Size Matters (in Output-Sharing Groups): Voting to End the Tragedy of the Commons

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  • Cherry, Josh
  • Salant, Stephen
  • Uler, Neslihan

Abstract

Individuals extracting common-pool resources in the field sometimes form output-sharing groups to avoid costs of crowding. In theory, if the right number of groups forms, Nash equilibrium aggregate effort should fall to the socially optimal level. Whether individuals manage to form the efficient number of groups and to invest within the chosen groups as theory predicts, however, has not been previously determined. We investigate these questions experimentally. We find that subjects do vote in most cases to divide themselves into the optimal number of output-sharing groups, and in addition do decrease the inefficiency significantly (by 50% to 71%). We did observe systematic departures from the theory when the group sizes are not predicted to induce socially optimal investment. Without exception these are in the direction of the socially optimal investment, confirming the tendency noted elsewhere in public goods experiments for subjects to be more “other-regarding” than purely selfish.

Suggested Citation

  • Cherry, Josh & Salant, Stephen & Uler, Neslihan, 2010. "Size Matters (in Output-Sharing Groups): Voting to End the Tragedy of the Commons," Discussion Papers dp-10-43, Resources For the Future.
  • Handle: RePEc:rff:dpaper:dp-10-43
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    References listed on IDEAS

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    1. Heintzelman, Martin D. & Salant, Stephen W. & Schott, Stephan, 2009. "Putting free-riding to work: A Partnership Solution to the common-property problem," Journal of Environmental Economics and Management, Elsevier, vol. 57(3), pages 309-320, May.
    2. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
    3. Baye, Michael R. & Hoppe, Heidrun C., 2003. "The strategic equivalence of rent-seeking, innovation, and patent-race games," Games and Economic Behavior, Elsevier, vol. 44(2), pages 217-226, August.
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    Keywords

    catch-sharing; common-pool resources; efficient private provision; free-riding; laboratory experiment; partnership solution;

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