CeDEx 2015-20: Entry or Exit? The Effect of Voluntary Participation on Cooperation (revised version of 2015-04)

Abstract

We study the effects of voluntary participation on cooperation in collective action problems. Voluntary participation may foster cooperation through an entry mechanism, which leads to assortative selection of interaction partners, or an exit mechanism, whereby the opportunity to leave the partnership can be used as a threat against free-riders. We examine the effectiveness of these mechanisms in a one-shot public goods experiment. Voluntary participation has a positive effect on provision only through the exit mechanism. Assortative selection of interaction partners seems to play a minor role in our setting, whereas the threat of costly exit is a powerful force to discipline free-riding.

Download a revised version of this paper 2017-12 in PDF format (The Effect of Voluntary Participation on Cooperation).

Authors

Daniele Nosenzo and Fabio Tufano

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