Entry or Exit? The Effect of Voluntary Participation on Cooperation

Daniele Nosenzo and Fabio Tufano ()
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Fabio Tufano: Department of Economics, University of Nottingham.

No 2015-04, Discussion Papers from The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham

Abstract: We study the effects of voluntary participation on public good provision. Voluntary participation may foster cooperation through two mechanisms: an entry mechanism, which leads to assortative selection of interaction partners, or an exit mechanism, whereby the opportunity to leave the partnership can be used as a means to resist exploitation by free-riders. We examine the relative effectiveness of these two mechanisms in a one-shot, two-person public goods game experiment. We find that voluntary participation has a positive effect on public good provision through the exit mechanism, but we do not find evidence of a positive effect of entry. Assortative selection of interaction partners seems to play a minor role in our setting, whereas the threat of costly exit is a powerful force to discipline free-riding.

Keywords: public goods; cooperation; voluntary participation; exit; entry; experiment (search for similar items in EconPapers)
Date: 2015-04
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-net and nep-soc
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Working Paper: Entry or Exit? The Effect of Voluntary Participation on Cooperation (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:not:notcdx:2015-04

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