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The Endogenous Formation of Coalitions to Provide Public Goods: Theory and Experimental Evidence

David McEvoy (), Todd Cherry and John Stranlund ()

No 2011-2, Working Papers from University of Massachusetts Amherst, Department of Resource Economics

Abstract: This paper examines the endogenous formation of coalitions that provide public goods in which players implement a minimum participation requirement before deciding whether to join. We demonstrate theoretically that payoff-maximizing players will vote to implement efficient participation requirements and these coalitions will form. However, we also demonstrate that if some players are averse to inequality they can cause inefficient outcomes. Inequality-averse players can limit free riding by implementing larger than efficient coalitions or by blocking efficient coalitions from forming. We test the theory with experimental methods and observe individual behavior and coalition formation consistent with a model of inequality-averse players.

Keywords: public goods; coalition formation; inequality aversion; participation requirement; experiments (search for similar items in EconPapers)
JEL-codes: C92 H41 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2011-04
New Economics Papers: this item is included in nep-cdm, nep-evo, nep-exp, nep-gth, nep-net and nep-pol
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Working Paper: The Endogenous Formation of Coalitions to Provide Public Goods: Theory and Experimental Evidence (2011) Downloads
Working Paper: The Endogenous Formation of Coalitions to Provide Public Goods: Theory and Experimental Evidence (2011) Downloads
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