Size Matters (in Output-Sharing Groups): Voting to End the Tragedy of the Commons

RFF Discussion Paper No. 10-43

27 Pages Posted: 10 Sep 2010

See all articles by Josh Cherry

Josh Cherry

University of Michigan at Ann Arbor - Department of Economics

Stephen W. Salant

University of Michigan; Resources for the Future

Neslihan Uler

New York University (NYU)

Date Written: September 8, 2010

Abstract

Individuals extracting common-pool resources in the field sometimes form output-sharing groups to avoid costs of crowding. In theory, if the right number of groups forms, Nash equilibrium aggregate effort should fall to the socially optimal level. Whether individuals manage to form the efficient number of groups and to invest within the chosen groups as theory predicts, however, has not been previously determined. We investigate these questions experimentally. We find that subjects do vote in most cases to divide themselves into the optimal number of output-sharing groups, and in addition do decrease the inefficiency significantly (by 50% to 71%). We did observe systematic departures from the theory when the group sizes are not predicted to induce socially optimal investment. Without exception these are in the direction of the socially optimal investment, confirming the tendency noted elsewhere in public goods experiments for subjects to be more “other-regarding” than purely selfish.

Keywords: catch-sharing, common-pool resources, efficient private provision, free-riding, laboratory experiment, partnership solution

JEL Classification: L23, Q20, Q22, O13

Suggested Citation

Cherry, Josh and Salant, Stephen W. and Uler, Neslihan, Size Matters (in Output-Sharing Groups): Voting to End the Tragedy of the Commons (September 8, 2010). RFF Discussion Paper No. 10-43, Available at SSRN: https://ssrn.com/abstract=1674423 or http://dx.doi.org/10.2139/ssrn.1674423

Josh Cherry

University of Michigan at Ann Arbor - Department of Economics ( email )

611 Tappan Street
Ann Arbor, MI 48109-1220
United States

Stephen W. Salant

University of Michigan ( email )

611 Tappan Street
Ann Arbor, MI 48109-1220
United States
313-764-2370 (Phone)
313-764-2769 (Fax)

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
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Neslihan Uler (Contact Author)

New York University (NYU) ( email )

Bobst Library, E-resource Acquisitions
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New York, NY 10003-711
United States

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