TY - JOUR
T1 - Endogenous group formation via unproductive costs
AU - Aimone, Jason A.
AU - Iannaccone, Laurence R.
AU - Makowsky, Michael D.
AU - Rubin, Jared
N1 - Funding Information:
Acknowledgments. We are grateful for comments received in seminars at Cal State Fullerton, Chapman University, George Mason University, the 2009 ASREC meetings, the 2010 meetings of the Public Choice Society, and the 2010 meetings of the Western Economic Association. We thank ICES for use of its laboratory facilities, and the John Templeton Foundation, IFREE, the Mercatus Center, and Chapman University for funding support. Aimone was funded in part by Brooks King-Casas and Makowsky received funding from Joshua Epstein’s NIH Director’s Pioneer Award, Number DP1OD003874 from the Office of the Director, National Institutes of Health.
PY - 2013/10
Y1 - 2013/10
N2 - Sacrifice is widely believed to enhance cooperation in churches, communes, gangs, clans, military units, and many other groups.We find that sacrifice can also work in the lab, apart from special ideologies, identities, or interactions. Our subjects play a modifiedVCMgame-one in which they can voluntarily join groups that provide reduced rates of return on private investment. This leads to both endogenous sorting (because free-riders tend to reject the reduced-rate option) and substitution (because reduced private productivity favours increased club involvement). Seemingly unproductive costs thus serve to screen out free-riders, attract conditional cooperators, boost club production, and increase member welfare. The sacrifice mechanism is simple and particularly useful where monitoring difficulties impede punishment, exclusion, fees, and other more standard solutions.
AB - Sacrifice is widely believed to enhance cooperation in churches, communes, gangs, clans, military units, and many other groups.We find that sacrifice can also work in the lab, apart from special ideologies, identities, or interactions. Our subjects play a modifiedVCMgame-one in which they can voluntarily join groups that provide reduced rates of return on private investment. This leads to both endogenous sorting (because free-riders tend to reject the reduced-rate option) and substitution (because reduced private productivity favours increased club involvement). Seemingly unproductive costs thus serve to screen out free-riders, attract conditional cooperators, boost club production, and increase member welfare. The sacrifice mechanism is simple and particularly useful where monitoring difficulties impede punishment, exclusion, fees, and other more standard solutions.
KW - Club goods
KW - Endogenous group formation
KW - Free riding
KW - Laboratory experiment
KW - Religion
KW - Sacrifice
KW - Self-selection
KW - Voluntary contribution mechanism
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U2 - 10.1093/restud/rdt017
DO - 10.1093/restud/rdt017
M3 - Article
C2 - 24808623
AN - SCOPUS:84886304466
SN - 0034-6527
VL - 80
SP - 1215
EP - 1236
JO - Review of Economic Studies
JF - Review of Economic Studies
IS - 4
M1 - rdt017
ER -