Growing Groups, Cooperation, and the Rate of Entry

University of Zurich Department of Economics Working Paper No. 103

Posted: 22 Dec 2012 Last revised: 23 Oct 2014

See all articles by Eva Ranehill

Eva Ranehill

Stockholm School of Economics

Frédéric Schneider

University of Cambridge - Judge Business School

Roberto A. Weber

University of Zurich - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: May 1, 2013

Abstract

We study the stability of voluntary cooperation in response to varying group growth rates. Using a laboratory public-good game, we construct a situation where increasing group size yields potential efficiency gains, but only with sustained cooperation. We then study the effect of exogenously varying growth rates on cooperation. Slow growth yields higher cooperation rates and welfare than fast growth, both for incumbents and entrants, which is consistent with optimistic self-reinforcing beliefs persisting under slower growth. Allowing incumbent group members to select growth rates also sustains high cooperation rates, but growth stalls at intermediate group sizes, leaving potential efficiency gains unrealized.

Keywords: Voluntary cooperation, experiment, public good game

JEL Classification: C92, C72

Suggested Citation

Ranehill, Eva and Schneider, Frédéric and Weber, Roberto A., Growing Groups, Cooperation, and the Rate of Entry (May 1, 2013). University of Zurich Department of Economics Working Paper No. 103. Available at SSRN: https://ssrn.com/abstract=2192577 or http://dx.doi.org/10.2139/ssrn.2192577

Eva Ranehill (Contact Author)

Stockholm School of Economics ( email )

PO Box 6501
Stockholm, 11383
Sweden

Frédéric Schneider

University of Cambridge - Judge Business School ( email )

Trumpington Street
Cambridge, CB2 1AG
United Kingdom

Roberto A. Weber

University of Zurich - Department of Economics ( email )

Zuerich, 8006
Switzerland

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

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