NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Bodo Sturm

Leipzig University of Applied Science
P.O.Box 301166
04251 Leipzig
Germany

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NBER Working Papers and Publications

May 2010On the Formation of Coalitions to Provide Public Goods - Experimental Evidence from the Lab
with Astrid Dannenberg, Andreas Lange: w15967
The provision of public goods often relies on voluntary contributions and cooperation. While most of the experimental literature focuses on individual contributions, many real-world problems involve the formation of institutions among subgroups (coalitions) of players. International agreements serve as one example. This paper experimentally tests theory on the formation of coalitions in different institutions and compares those to a voluntary contribution mechanism. The experiment confirms the rather pessimistic conclusions from the theory: only few players form a coalition when the institution prescribes the full internalization of mutual benefits of members. Contrary to theory, coalitions that try to reduce the free-riding incentives by requiring less provision from their members, do not...
 
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