Better stuck together or free to go? Of the stability of cooperation when individuals have outside options

Alexia Gaudeul, Paolo Crosetto and Gerhard Riener

Journal of Economic Psychology, 2017, vol. 59, issue C, 99-112

Abstract: How do outside options affect cooperation? We examine the stability of cooperation and the reasons for exit in public projects with stochastic outcomes, imperfect monitoring and an exit option. We find that treatments with high barriers to exit generate higher welfare overall as they foster stability and prevent inefficient separation of pairs. There is excessive exit in treatments with low barriers to exit, driven in part by an overestimate of the likelihood that the peer will leave and a desire not to be left alone in the public project. We contrast long-term “strategic” and short-term “egoistic” drivers of exit and find that short-term cost-benefit considerations play a more important role in treatments with lower barriers to exit.

Keywords: Beliefs; Cooperation; Exit; Outside option; Public goods; Stability (search for similar items in EconPapers)
JEL-codes: C23 C92 H41 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S016748701630099X
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Better stuck together or free to go? Of the stability of cooperation when individuals have outside options (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:joepsy:v:59:y:2017:i:c:p:99-112

DOI: 10.1016/j.joep.2017.01.005

Access Statistics for this article

Journal of Economic Psychology is currently edited by G. Antonides and D. Read

More articles in Journal of Economic Psychology from Elsevier
Bibliographic data for series maintained by Catherine Liu ().