Voluntary Partnerships For Equally Sharing Contribution Costs - Theoretical Aspects and Experimental Evidence

Irene Maria Buso, Daniela Di Cagno, Werner Gueth and Lorenzo Spadoni

Discussion Papers from Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy

Abstract: We investigate, both theoretically and experimentally, an institutional mechanism designed to enhance cooperation. In this mechanism, contributors have the option to voluntarily contribute to the public good and decide whether to join a (sub)group where partners equally share the contribution cost. Theoretically, stable cost-sharing partnerships enhance efficiency since their partners fully contribute, while outsiders would free-ride. Our data reveal that individual joining and contribution behaviors do not always align with benchmark predictions: partnerships are not always formed, and when they are, they are not always of the optimal size; partners often contribute less than maximally, and outsiders more than minimally. Nonetheless, we document systematic evidence of partnership formation and significantly improved provision of public goods across rounds.

Keywords: Public Good; Group Formation; Group Size; Experiments (search for similar items in EconPapers)
JEL-codes: C92 D85 H41 (search for similar items in EconPapers)
Date: 2024-06-01
New Economics Papers: this item is included in nep-cdm, nep-des, nep-exp and nep-gth
Note: ISSN 2039-1854
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Persistent link: https://EconPapers.repec.org/RePEc:pie:dsedps:2024/309

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