Experimental Departures from Self-Interest when Competing Partnerships Share Output

Josh Cherry, Stephen Salant and Neslihan Uler

RFF Working Paper Series from Resources for the Future

Abstract: When every individual's effort imposes negative externalities, self-interested behavior leads to socially excessive effort. To curb these excesses when effort cannot be monitored, competing output-sharing partnerships can form. With the right-sized groups, aggregate effort falls to the socially optimal level. We investigate this theory experimentally and find it makes correct qualitative predictions but there are systematic quantitative deviations, always in the direction of the socially optimal investment. By using data on subjects' conjectures of each other's behavior we show that deviations are consistent with both altruism and conformity (but not extremeness aversion).

Keywords: output-sharing; partnership solution; laboratory experiment; altruism; conformity (search for similar items in EconPapers)
JEL-codes: L23 O13 Q20 Q22 (search for similar items in EconPapers)
Date: 2013-03-14
New Economics Papers: this item is included in nep-cbe, nep-evo and nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Journal Article: Experimental departures from self-interest when competing partnerships share output (2015)
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