Better stuck together or free to go? Of the stability of cooperation when individuals have outside options

Alexia Gaudeul (1, 2) , Paolo Crosetto (3, 4) , Gerhard Riener (5)

1 Georg-August-University = Georg-August-Universität Göttingen
2 Chair of Microeconomics
3 GAEL - Laboratoire d'Economie Appliquée de Grenoble
4 INRA - Institut National de la Recherche Agronomique
5 DICE - Düsseldorf Institute for Competition Economics

How do outside options affect cooperation? We examine the stability of cooperation and the reasons for exit in public projects with stochastic outcomes, imperfect monitoring and an exit option. We find that treatments with high barriers to exit generate higher welfare overall as they foster stability and prevent inefficient separation of pairs. There is excessive exit in treatments with low barriers to exit, driven in part by an overestimate of the likelihood that the peer will leave and a desire not to be left alone in the public project. We contrast long-term “strategic” and short-term “egoistic” drivers of exit and find that short-term cost-benefit considerations play a more important role in treatments with lower barriers to exit.

Mots clés: economic behaviour; public goods; stability; public good; input output; belief; cooperation; exit; outside option

Mots clés: entrée sortie; bien public; économie expérimentale; collaboration; comportement économique

Domaines: Economies et finances

Alexia Gaudeul, Paolo Crosetto, Gerhard Riener. Better stuck together or free to go? Of the stability of cooperation when individuals have outside options. Journal of Economic Psychology, 2017, 59 (April), pp.99-112. ⟨10.1016/j.joep.2017.01.005⟩. ⟨hal-01461165⟩