Veto Power and Coalition Formation in the Commons: An Experiment

24 Pages Posted: 3 Jun 2021

See all articles by Marc Willinger

Marc Willinger

University of Montpellier

Oussama Rhouma

affiliation not provided to SSRN

Klarizze Puzon

Swedish University of Agricultural Sciences (SLU) - Center for Environmental and Resource Economics (CERE)

CERE Center for Environmental and Resource Economics

CERE

Date Written: June 2, 2021

Abstract

We propose a five-player common-pool resource (CPR) game with endogenous coalition formation. We show that the level of extraction from the CPR depends on the size of each coalition that is formed and on the final coalition structure. These predictions are tested in a laboratory experiment. We consider two treatments: dictator vs. veto. In the dictator treatment, at each stage of the coalition formation game, a randomly chosen player imposes the coalition size and selected members cannot refuse to become a member. In the veto treatment, players have the right to refuse joining the current coalition if they want to and make counter-proposals. We observe that the formation of the grand coalition is more frequent in the dictator treatment. However, with the repetition of the coalition formation game, the grand coalition becomes more frequent under both treatment, and past experience of a grand coalition increases the likelihood that the current coalition structure is the grand coalition. Finally, the possibility to form coalitions is beneficial at reducing CPR extractions, compared to the singleton structure, in both treatments.

Keywords: coalition formation, laboratory experiment, veto power, common pool resource

JEL Classification: C92, C71, Q01, H41

Suggested Citation

Willinger, Marc and Rhouma, Oussama and Puzon, Klarizze and Center for Environmental and Resource Economics, CERE, Veto Power and Coalition Formation in the Commons: An Experiment (June 2, 2021). Available at SSRN: https://ssrn.com/abstract=3858438 or http://dx.doi.org/10.2139/ssrn.3858438

Marc Willinger (Contact Author)

University of Montpellier ( email )

163 rue Auguste Broussonnet
France

Oussama Rhouma

affiliation not provided to SSRN

Klarizze Puzon

Swedish University of Agricultural Sciences (SLU) - Center for Environmental and Resource Economics (CERE) ( email )

Almas Allé 10
Umeå, 750 07
Sweden

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