The problem of maintaining compliance within stable coalitions: experimental evidence
This study examines the performance of stable cooperative coalitions that form to provide a public good when coalition members have the opportunity to violate 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 are responsible for financing enforcement. However, our experiments reveal that member-financed enforcement of compliance reduces the provision of the public good. The decrease is attributed to an increase in the participation threshold for a stable coalition to form and to significant levels of noncompliance. Provision of the public good increases significantly when we abandon the strict stability conditions and require all subjects to join a coalition for it to form. Copyright 2011 Oxford University Press 2010 All rights reserved, Oxford University Press.
Year of publication: |
2011
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Authors: | McEvoy, David M. ; Murphy, James J. ; Spraggon, John M. ; Stranlund, John K. |
Published in: |
Oxford Economic Papers. - Oxford University Press. - Vol. 63.2011, 3, p. 475-498
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Publisher: |
Oxford University Press |
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