Journal
ECONOMIC JOURNAL
Volume 115, Issue 506, Pages 1032-1053Publisher
BLACKWELL PUBLISHING
DOI: 10.1111/j.1468-0297.2005.01031.x
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We find that a process of voluntary association where individuals express a preference about whom they want to be associated with can create strong incentives to increase efficiency and contributions in provision of a public good. This process of endogenous group formation perfectly sorted contributions by the order of group formation. Comparison of middle and last period behaviour suggests that a majority of the subject population are conditional cooperators, with a minority of monetary payoff maximisers. The experiment illustrates that under favourable conditions, where the opportunities of entry and exit are symmetrically balanced, a process of voluntary association can mitigate the free-rider problem.
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