Abstract

http://ssrn.com/abstract=721524
 
 

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The Fear of Exclusion: Individual Effort when Group Formation is Endogenous


Kjell Arne Brekke


University of Oslo - Department of Economics; University of Oslo - Frisch Center

Karine Nyborg


University of Oslo - Department of Economics; University of Oslo - Ragnar Frisch Centre for Economic Research

Mari Rege


Case Western Reserve University - Department of Economics

April 2005

University of Oslo Economics Memorandum No. 09/2005

Abstract:     
To secure their membership in a popular group, individuals may contribute more to the group's local public good than they would if group formation were exogenous. Those in the most unpopular group do not have this incentive to contribute to their group. Substantial differences in individual efforts levels between groups may be the result. A principal may prefer either exogenous or endogenous group formation, depending on whether an increase in contributions to the local public good coincides with the principal's interests. We analyze two examples: Social interaction in schools, and multiple-task teamwork.

Number of Pages in PDF File: 23

Keywords: Local public goods, opportunity costs, popularity, multiple-task principal-agent analysis

JEL Classification: C72, D11, D23, L24, Z13

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Date posted: May 15, 2005  

Suggested Citation

Brekke, Kjell Arne and Nyborg, Karine and Rege, Mari, The Fear of Exclusion: Individual Effort when Group Formation is Endogenous (April 2005). University of Oslo Economics Memorandum No. 09/2005. Available at SSRN: http://ssrn.com/abstract=721524 or http://dx.doi.org/10.2139/ssrn.721524

Contact Information

Kjell Arne Brekke
University of Oslo - Department of Economics ( email )
P.O. Box 1095 Blindern
N-0317 Oslo
Norway
+47 22 84 11 69 (Phone)
University of Oslo - Frisch Center ( email )
Gaustadalleen 21
N-0349 Oslo
Norway
+47 22 95 88 19 (Phone)
+47 22 95 88 25 (Fax)
HOME PAGE: www.frisch.uio.no
Karine Nyborg (Contact Author)
University of Oslo - Department of Economics ( email )
P.O.Box 1095 Blindern
Oslo, N-0317
Norway
HOME PAGE: http://folk.uio.no/karineny/
University of Oslo - Ragnar Frisch Centre for Economic Research ( email )
Gaustadalleen 21
N-0349 Oslo
Norway
+47 22 95 88 23 (Phone)
+47 22 95 88 25 (Fax)
HOME PAGE: http://www.frisch.uio.no/cv/karineny_eng.html
Mari S. Rege
Case Western Reserve University - Department of Economics ( email )
Cleveland, OH 44106
United States
216-368-4185 (Phone)
216-368-5039 (Fax)
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