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on Game Theory |
| By: | Eric Bahel (Department of Economics, Virginia Polytechnic Institute and State University); Christian Trudeau (Department of Economics, University of Windsor) |
| Abstract: | The job scheduling problem is a classic operational research problem in which agents have jobs to be executed by machines in given time slots, with each machine being able to process only one job at a time. We study this problem using cooperative game theory, focusing on how to divide the minimum cost (of executing all jobs) between the agents. First, we characterize the set of stable allocations, which all charge only users whose jobs are executed in peak-demand time periods. Second, using properties designed to avoid strategic mergers or splits of the jobs, we offer axiomatizations for two remarkable stable allocation rules. Third, observing that all stable rules fail Unanimity Lower Bound (ULB), a property requiring that everybody pay an equal share of the first machine (since it is needed by all), we study and axiomatize the Shapley value, which satisfies ULB. A compromise is then proposed between Stability and ULB. |
| Keywords: | game theory; cost sharing; job scheduling; stability; unanimity lower bound; Shapley value. |
| JEL: | C71 D63 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:wis:wpaper:1803&r=gth |
| By: | Emilio Calvo (Universidad de Valencia. ERI-CES) |
| Abstract: | We model the problem of how to distribute the public spending between the different regions of a country once all taxes are collected as a cooperative game in coalitional form. A tax game is built, specifying how much tax is collected in every region and coalition of regions in the country under secession. In this paper we propose two tax rules: the balanced tax rule, and the redistributive balanced tax rule. Both rules have the property of being stable for every tax problem, as they belong to the core of the tax game. The Spanish case is considered as example. We compare their redistributive behavior with the present Spanish financial system, with the population egalitarian, and with the optimistic secession tax rules. |
| Keywords: | fiscal federalism; fiscal stability; secessionism; coalitional |
| JEL: | H72 H77 C71 |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:dbe:wpaper:0218&r=gth |
| By: | Igal Milchtaich (Bar-Ilan University) |
| Abstract: | Static stability in strategic games differs from dynamic stability in only considering the players’ incentives to change their strategies. It does not rely on any assumptions about the players’ reactions to these incentives and it is thus independent of the law of motion (e.g., whether players move simultaneously or sequentially). This paper presents a general notion of static stability in symmetric N-player games and population games, of which evolutionarily stable strategy (ESS) and continuously stable strategy (CSS) are essentially special cases. Unlike them, the proposed stability concept does not depend on the existence of special structures in the game such as multilinear payoff functions or unidimensional strategy spaces. |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:biu:wpaper:2017-07&r=gth |
| By: | Giuseppe Attanasi; Pierpaolo Battigalli; Elena Manzoni; Rosemarie Nagel |
| Abstract: | We study in a theoretical and experimental setting the interaction between belief-dependent preferences and reputation building in a nitely repeated trust game. We focus mainly on the effect of guilt aversion. In a simple two-types model, we analyze the effect of reputation building in presence of guilt-averse players and derive behavioral predictions. In the experiment, we elicit information on trustees belief-dependent preferences and disclose it to the paired trustor before the repeated game. Our ex- perimental results show that disclosing information on the trustees belief-dependent preferences and thus letting players play the repeated trust game in presence of almost complete information leads to higher trust and cooperation than in the corresponding incomplete information game setting. In particular, disclosure of information on preferences of guilt-averse trustees also enhances the trustorscooperation. Disclosure of information on belief-dependent preferences of reciprocity-concerned trustees, instead, does not lead to higher trust and cooperation. We show that this is theoretically consistent with subjects featuring low reciprocity concerns. JEL classifi cation: C72; C73; C91. Keywords: Repeated psychological game; reputation; guilt; reciprocity; almost complete information. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:igi:igierp:622&r=gth |
| By: | Bondarev, Anton |
| Abstract: | Dynamic game with changing leader is studied on the example of R&D co-opetition structure. The leader benefits from higher followers' innovations rate and followers are enjoying a spillover from the leader. Leadership changes because of asymmetric efficiency of investments of players. It is demonstrated that under sufficiently asymmetric players there is no long-run leader in this game and all players act as followers. Moreover this outcome may be the socially optimal one. In decentralised setting additional complex types of dynamics are observed: permanent uctuations around symmetric (pseudo)equilibrium and chaotic dynamics. This last is possible only once strategies of players are interdependent. Cooperative solution is qualitatively similar for any number of players while market solution is progressively complex given all players are asymmetric. Results are extended to an arbitrary linear-quadratic multi-modal differential game with spillovers and the structure necessary for the onset of non-deterministic chaos is discussed. |
| Keywords: | technological spillovers; heterogeneous innovations; asymmetric players; social optimality; market inefficiency; multi-modal differential games; piecewise-smooth systems |
| JEL: | C61 C73 L16 O32 |
| Date: | 2018–04–13 |
| URL: | http://d.repec.org/n?u=RePEc:bsl:wpaper:2018/12&r=gth |
| By: | Gordon, Sidartha; Henry, Emeric; Murto, Pauli |
| Abstract: | We introduce a neighborhood structure in waiting games where the players decide when to``stop" (exit a market, adopt a technology). The payoff of stopping increases each time a neighbor stops. We show that the dynamic evolution of the network starkly depends on initial parameters and can take the form of either a shrinking network, where players at the edges stop first, or a fragmenting network where interior players stop first making the network split up in smaller ones over time. We find that, in addition to the coordination inefficiency standard in waiting games, the neighbourhood structure gives rise to two other inefficiencies, the first linked to the order of exit and the second to the final distribution of remaining nodes. We consider subsidy programs aimed at correcting these inefficiencies. |
| Keywords: | inefficiencies; networks; waiting games |
| JEL: | C73 D83 D85 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12834&r=gth |
| By: | Mao, Liang |
| Abstract: | We analyze the design of international environmental agreement (IEA) by a three-stage coalition formation game. In stage one, a designer chooses an IEA rule which, depending on the coalition of signatories formed in stage two, specifies the action that each signatory should take in stage three. A certain degree of participation uncertainty exists in that each country intending to sign the IEA for its best interest has a probability to end up a non-signatory. An IEA rule is said to be optimal if it maximizes the expected payoff of each signatory. We provide an algorithm to determine an optimal rule, and show its advantage over some rules used in the literature. |
| Keywords: | International environmental agreement; coalition formation; participation uncertainty, stable coalition |
| JEL: | C72 H41 Q54 |
| Date: | 2017–05–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:86248&r=gth |
| By: | Marina Azzimonti; Marcos Fernandes |
| Abstract: | We study how the structure of social media networks and the presence of fake news might affect the degree of misinformation and polarization in a society. For that, we analyze a dynamic model of opinion exchange in which individuals have imperfect information about the true state of the world and are partially bounded rational. Key to the analysis is the presence of internet bots: agents in the network that do not follow other agents and are seeded with a constant flow of biased information. We characterize how the flow of opinions evolves over time and evaluate the determinants of long-run disagreement among individuals in the network. To that end, we create a large set of heterogeneous random graphs and simulate a long information exchange process to quantify how the bots’ ability to spread fake news and the number and degree of centrality of agents susceptible to them affect misinformation and polarization in the long-run. |
| JEL: | C45 C63 D72 D8 D83 D85 D91 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24462&r=gth |
| By: | Igal Milchtaich (Bar-Ilan University) |
| Abstract: | Static stability in strategic games differs from dynamic stability in only considering the players’ incentives to change their strategies. It does not rely on any assumptions about the players’ reactions to these incentives and it is thus not linked with any particular dynamics. This paper introduces a general notion of (local) static stability of strategy profiles that is applicable to any N-player strategic game. It examines a number of important classes of games, with strategy spaces or payoff functions that have special structures, where this general notion takes a simple, concrete form. The paper explores the relations between these special cases of static stability and different versions of dynamic stability, and connects static stability in general, asymmetric games with the related, but essentially weaker, notion of static stability of strategies in symmetric games. |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:biu:wpaper:2017-08&r=gth |
| By: | Heczko, Alexander; Kittsteiner, Thomas; Ott, Marion |
| Abstract: | Combinatorial auctions, in particular core-selecting auctions, have increasingly attracted the attention of academics and practitioners. We experimentally analyze core-selecting auctions under incomplete information and find that they perform better than the Vickrey auction. The proportions of efficient allocations are similar in both types of auctions, but the proportions of stable (core) allocations and the revenue are higher in the core-selecting auctions. This is in particular true for an independent private values setting in which theory does not predict this better performance of the core-selecting auction. We trace the causes of the performance differences back to patterns in bids. The core-selecting auctions provide incentives for overbidding the own valuation and - under certain conditions - also for bid-shading, which can hamper performance. In the experiment, bidders react in the predicted direction to these incentives, though less pronouncedly than predicted. |
| Keywords: | Combinatorial auction,VCG mechanism,core-selecting auction,experiment |
| JEL: | D44 C72 D82 C92 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:176842&r=gth |
| By: | Matteo M. Marini (Dept of Economics, Università degli Studi dell'Insubria, Varese-Italy, LEE and Dept of Economics, Universitat Jaume I, Castellón-Spain); Aurora García-Gallego (LEE & Department of Economics, Universitat Jaume I, Castellón, Spain); Luca Corazzini (Department of Economics, University of Venice ‘Cà Foscari’, Venice, Italy) |
| Abstract: | This paper offers evidence on the impact of communication on public good provision within the context of ambiguous public good values and noisy information. We run a laboratory experiment with two treatments, where the control variable is pre-play communication in the form of unrestricted text chat. A binary threshold public goods game with four-person groups, threshold of three and partner matching is at the core of the design. We introduce a novel provision mechanism which, in case the threshold is reached, consists in a binary lottery producing either a stated high value or a stated low value for the whole group with unknown probability. Before the contribution decision, private signals for the actual value of the public good are provided. The results at the group level emphasize that, in accordance with related literature, communication significantly increases public good provision by reducing inefficiency that comes from wasteful under-contribution. Nevertheless, despite the presence of a valid coordination device, the players in the chat treatment seem to neglect the free-rider issue and often end up over-contributing, in contrast with previous scientific findings. After chat analysis, we discover that the agreements on all members contributing are often successful, arguably thanks to pronounced group identity generated by the partner matching. Moreover, we propose the common fate hypothesis as further explanation of the massive over-contribution. Since the players show greater concern for ambiguity than for the free-rider problem, we speculate about a possible crowding out effect of the former on the latter. |
| Keywords: | communication, ambiguity, private signal, threshold public goods game |
| JEL: | C92 D81 D82 D83 H41 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:jau:wpaper:2018/03&r=gth |
| By: | Yuval Heller (Bar-Ilan University); Erik Mohlin |
| Abstract: | We study environments in which agents are randomly matched to play a Prisoner’s Dilemma, and each player observes a few of the partner’s past actions against previous opponents. We depart from the existing related literature by allowing a small fraction of the population to be commitment types. The presence of committed agents destabilizes previously proposed mechanisms for sustaining cooperation. We present a novel intuitive combination of strategies that sustains cooperation in various environments. Moreover, we show that under an additional assumption of stationarity, this combination of strategies is essentially the unique mechanism to support full cooperation, and it is robust to various perturbations. Finally, we extend the results to a setup in which agents also observe actions played by past opponents against the current partner, and we characterize which observation structure is optimal for sustaining cooperation. |
| Keywords: | Community enforcement; indirect reciprocity; random matching; Prisoner’s Dilemma; image scoring. |
| JEL: | C72 C73 D83 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:biu:wpaper:2017-12&r=gth |
| By: | Shubhayan Sarkar; Colin Benjamin |
| Abstract: | In this work, we aim to answer the question- what triggers cooperative behaviour in the thermodynamic limit by taking recourse to the Public goods game. Using the idea of mapping the Ising model Hamiltonian to payoffs in game theory we calculate the Magnetisation of a game in the thermodynamic limit. We see a phase transition in the thermodynamic limit of the two player Public goods game. We observe that punishment acts as an external field for the two player Public goods game triggering cooperation, while cost can be a trigger for defection or suppressing cooperation. Finally, reward also acts as a trigger for cooperation while the role of inverse temperature (fluctuations in choices) remains ambiguous. |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1804.06465&r=gth |
| By: | Rosenmüller, Joachim (Center for Mathematical Economics, Bielefeld University) |
| Abstract: | This paper continues the treatise of vNM Stable Sets for totally balanced (cooperative) games with a continuum of players. We generalize and extend the results obtained by a series of presentations of this topic (Part I,II,III,IV see [5], [6], [7], [8], [9]). Thus, the coalitional function is generated by r "production factors" (non atomic measures). Some *q |
| Date: | 2018–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:bie:wpaper:581&r=gth |
| By: | He, Jianhong; Zhang, Lei; Lu, Binbin; Li, Lin |
| Abstract: | This paper studies the pricing strategy in the closed-loop supply chain with Nash bargaining when considering fairness concerns and risk aversion. Mainly, the authors argue that behavioral factors (i.e., fairness concern and risk aversion) should be introduced into pricing process. They consider three different pricing models: the first is that both manufacturer and retailer have fairness concern; the second is both manufacturer and retailer have risk aversion and the final is manufacturer has risk aversion but retailer has both risk aversion and fair concern. Then the authors analyze the model with game theory. The results showthat fairness and risk aversion change the optimal pricing strategy, which affects the expected profits of retailers and manufacturers. The impact of the two (relatively irrational) behavioral factors on wholesale price and retail price of new products, as well as the recycle price and recycle transfer price of the waste products are not the same. For new products, wholesale price is the most affected by the behavioral factors, and the sales price as the second. For the waste recycling products, the transfer price is the most affected by the behavioral factors, and recycle price as the second. When facing the fairness and risk aversion retailer, retailers' fairness concern is good for both manufacturers and retailers. This innovative model for pricing strategy adds implications for sustainability in supply chain operations. |
| Keywords: | closed-loop supply chain,irrational behavior education,fairness concerns,risk aversion,pricing strategy |
| JEL: | D4 L11 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:201835&r=gth |
| By: | Fershtman, Chaim; Persitz, Dotan |
| Abstract: | We present a strategic network formation model which is based on membership in clubs. Agents choose a set of clubs with which they wish to be affiliated. The set of all club memberships (an environment) induces a weighted network in which two agents are directly connected if they are members of the same club. Two agents may also be indirectly connected using the multiple memberships of third parties. Agents gain from their position in the induced network and pay membership fees. Thus, both clubs and the network are formed simultaneously. Using two specifications of the weighting function we introduce two models based upon congestion - one, the club congestion model wherein the weight of each link depends upon the size of the smallest shared club and the other, the individual congestion model wherein each link's weight depends on the number of affiliations maintained by the two agents. In the club congestion model we focus on the trade-off between the size of the club, depreciation due to indirect connections and membership fees. In the individual congestion model the Grand Club environment is the unique efficient environment. However, a coordination failure arises due to the wide externalities incurred by the formation of new affiliations. We believe that this framework may serve as a basis for an empirical examination of the role of linking platforms in shaping real-life social networks. |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12874&r=gth |
| By: | Solferino, Nazaria; Solferino, Viviana; Taurino, SerenaFiona |
| Abstract: | In this paper we devise a slightly modified version of the Vote with the Wallet Game used by Becchetti et al.(2015, 2017) to the use of Social Media, where the player decides whether to responsibly share social knowledge or not. We follow the point of view of Bennet and Bennet (2010) according to which another social settings may emerge trough the so-called "process of collaborative entanglement". In this environment members of a community interact continuously with strong emotional feelings to combine the sources of knowledge and the beneficiaries of that knowledge and move toward a common direction. By applying our model to the quantum game theory we substantially confirm that the cooperative strategy becomes the optimal one depending on frequency of interactions and people cultural, geographical and social reachability and traceablity. |
| Keywords: | Social Media,Quantum,games,Nash Equilibrium,fake news |
| JEL: | C7 C71 D0 D01 D03 I0 Z0 |
| Date: | 2018–04–16 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:86228&r=gth |
| By: | Antonio Cabrales; Francesco Feri; Piero Gottardi; Miguel A. Meléndez-Jiménez |
| Abstract: | This paper reports on experiments testing the viability of markets for cheap talk information. We find that the poor quality of the information transmitted leads to a collapse of information markets. The reasons for this are surprising given the previous experimental results on cheap-talk games. Our subjects provide low-quality information even when doing so does not increase their monetary payoff. |
| Keywords: | experiment, cheap talk, auction, information acquisition, information sale |
| JEL: | D83 C72 G14 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6975&r=gth |
| By: | Christian Ewerhart; Guang-Zhen Sun |
| Abstract: | The symmetric two-player Hirshleifer (1989) contest is shown to admit a unique equilibrium. The support of the equilibrium strategy is finite and includes, in particular, the zero expenditure level. We also establish a lower bound for the cardinality of the support and an upper bound for the undissipated rent. |
| Keywords: | Contests, mixed-strategy equilibrium, rent dissipation, uniqueness |
| JEL: | C72 D72 D74 |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:286&r=gth |
| By: | Danz, David; Madarász, Kristóf; Wang, Stephanie |
| Abstract: | We study strategic reasoning and the beliefs people form about the beliefs of others in the presence of private information. We find that while people naively project and think others have the same information as they do, they also anticipate the analogous projection of their differentially-informed opponents onto them. In turn, the typical person explicitly thinks that others form systematically biased beliefs. Specifically, our paper directly tests the model of projection equilibrium, Madarasz (2014, revised 2016), which posits a parsimonious one-to-one relationship between the partial extent to which a player projects and forms biased beliefs about the beliefs others,?, and the partial extent to which she anticipates but underestimate the same systematic bias in others' beliefs of her beliefs,?²². We find that the distribution of the partial extent to which players project onto others and the distribution of the partial extent to which they anticipate others' projection onto them is remarkably consistent with the tight link implied by the model. |
| JEL: | C9 D2 D8 D9 |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12867&r=gth |
| By: | Majerczyk, Michael; Sheremeta, Roman; Tian, Yu |
| Abstract: | We examine theoretically and experimentally how combining between-team and within-team incentives affects behavior in team tournaments. Theory predicts that free-riding is likely to occur when there are only between-team incentives, and offering within-team incentives may solve this problem. However, if individuals collude, then within-team incentives may not be as effective at reducing free-riding. Consistent with the theoretical predictions, the results of our experiment indicate that although between-team incentives are effective at increasing individual effort, there is substantial free-riding and declining effort over time. Importantly, a combination of between-team and within-team incentives is effective not only at generating effort but also at sustaining effort over time, mitigating free-riding problem, increasing cooperation and decreasing collusion within teams. |
| Keywords: | individual incentive, team incentive, tournament, free-riding, collusion |
| JEL: | C72 D72 H41 |
| Date: | 2018–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:86280&r=gth |
| By: | Chiara Aina; Pierpaolo Battigalli; Astrid Gamba |
| Abstract: | In social dilemmas, choices may depend on belief-dependent motivations, which enhance the credibility of promises or threats at odds with personal gain maximization. We address this issue theoretically and experimentally in the context of the Ultimatum Minigame, assuming that the choice of accepting or rejecting an unfair proposal is affected by a combination of frustration, due to unfulfilled expectations, and inequity aversion. We increase the responder's payoff from the default allocation (the proposer's outside option) with the purpose of increasing the responder's frustration due to the unfair proposal, and thus his willingness to reject it. In addition, we manipulate the method of play, with the purpose of switching on (direct response method) and off (strategy method) the responder's experience of anger. We found overwhelming evidence in support of belief-dependent preferences: in the direct method, the higher the responders' initial expectations of the default allocation, the more likely they are to reject the unfair proposal. In line with our predictions, the direct method increases the conditional frequency of rejections. Instead, against our predictions, the payoff increase does not have such effect. Interestingly, the distribution of actions of male subjects is in line with the theory, but not that of females. Keywords: Experiments, psychological games, ultimatum minigame, frustration, anger, rationalizability. JEL classification: C72, C91, D03. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:igi:igierp:621&r=gth |
| By: | Matthew T. Cole; James Lake; Benjamin Zissimos |
| Abstract: | We develop a new theoretical framework of trade agreement (TA) formation, called a ‘parallel contest’, that emphasizes the political fight over TA ratification within countries. TA ratification is inherently uncertain in each country, where anti- and pro-trade interest groups contest each other to influence their own governments’ ratification decision. Unlike prior literature, the protection embodied in negotiated TA tariffs reflects a balance between the liberalizing force of lobbying and inherently protectionist government preferences. Moreover, new international political externalities emerge that are not internalized by governments that just internalize terms of trade externalities. |
| Keywords: | contests, international integration, trade agreement |
| JEL: | F02 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6956&r=gth |
| By: | Tetsuya Shinkai (School of Economics, Kwansei Gakuin University); Ryoma Kitamura (Faculty of Economics, Ryukoku University) |
| Abstract: | We consider product line strategies of duopolistic firms supplying two vertically differentiated products with non-negativity output constraint and its expectation on rival's product line reaction. We consider a game in which there exists a heterogeneous unit production costs in high quality goods but is homogeneous in low quality product between firms. We derive equilibria for the game and characterize graphically firms' product line strategies and the realized profits of both firms through quality superiority and relative cost efficiency ratios. We also show that the efficient cost firm earns more than the inefficient firm except for the special case where both firms specialize in low quality good. We also illustrate that firms can correctly conjecture the ex ante relationship between the quality superiority of both goods and the relative cost efficiency ratios of firms on high quality good ex post in equilibrium. |
| Keywords: | Multi-product firm; Duopoly; Substitution of Production between products; Vertical product differentiation |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:kgu:wpaper:179&r=gth |
| By: | Mariotti, Thomas; Schweizer, Nikolaus; Szech, Nora |
| Abstract: | A present-biased consumer has to make sequential consumption decisions under no commitment. Consumption is enjoyable in the short term but potentially harmful in the long term. The likelihood of harmful future consequences hinges on the consumer's type. While the distribution of types is common knowledge, the consumer's individual type is initially unknown. We study information design in this setting, varying how much a consumer learns about his type via an information nudge. We first consider a mechanism designer who is benevolent in the sense that his interests are aligned with the consumer's. We find that there always exists an optimal incentive-compatible persuasion mechanism that is of cutoff type, either recommending consumption or abstinence, and we provide a full characterization of this information nudge for an arbitrary distribution of types. Under a stronger bias for the present, the target group of the nudge who receives a credible signal to abstain must be tightened. We compare this information nudge with the optimal information structure if expected consumption should be minimized, and if it should be maximized. The first may be the goal of a health authority, whereas the latter may be preferred by a lobbyist. |
| Keywords: | Information Design; Information Nudge; Present-Biased Preferences; SelfControl |
| JEL: | C73 D82 |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:32617&r=gth |
| By: | Joachim Weimann; Jeannette Brosig-Koch; Timo Heinrich; Heike Hennig-Schmidt; Claudia Keser |
| Abstract: | Since Mancur Olson’s “Logic of collective action” it is common conviction in social sciences that in large groups the prospects of a successful organization of collective actions are rather bad. Following Olson’s logic, the impact of an individual’s costly contribution becomes smaller if the group gets larger and, consequently, the incentive to cooperate decreases with group size. Conducting a series of laboratory experiments with large groups of up to 100 subjects, we demonstrate that Olson’s logic does not generally account for observed behavior. Large groups in which the impact of an individual contribution is almost negligible are still able to provide a public good in the same way as small groups in which the impact of an individual contribution is much higher. Nevertheless, we find that small variations of the MPCR in large groups have a strong effect on contributions. We develop a hypothesis concerning the interplay of MPCR and group size, which is based on the assumption that the salience of the advantages of mutual cooperation plays a decisive role. This hypothesis is successfully tested in a second series of experiments. Our result raises hopes that the chance to organize collective action of large groups is much higher than expected so far. |
| Keywords: | public goods, large groups |
| JEL: | C90 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6962&r=gth |