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The choice of institutions to solve cooperation problems: a survey of experimental research

Journal article
Authors Astrid Dannenberg
C. Gallier
Published in Experimental Economics
Pages 34
ISSN 1386-4157
Publication year 2019
Published at Department of Economics
Pages 34
Language en
Links dx.doi.org/10.1007/s10683-019-09629...
Keywords Literature review, Experiments, Cooperation, Public goods, Endogenous, institutional choice, Voting, public-goods, minimum participation, collective choice, tax evasion, punishment, provision, coalitions, sanctions, rules, game
Subject categories Economics

Abstract

A growing experimental literature studies the endogenous choice of institutions to solve cooperation problems arising in prisoners' dilemmas, public goods games, and common pool resource games. Participants in these experiments have the opportunity to influence the rules of the game before they play the game. In this paper, we review the experimental literature of the last 20 years on the choice of institutions and describe what has been learned about the quality and the determinants of institutional choice. Cooperative subjects and subjects with optimistic beliefs about others often vote in favor of the institution. Almost all institutions improve cooperation if they are implemented, but they are not always implemented by the players. Institutional costs, remaining free-riding incentives, and a lack of learning opportunities are identified as the most important barriers. Unresolved cooperation problems, like global climate change, are often characterized by these barriers. The experimental results also show that cooperation tends to be higher under endogenously chosen institutions than exogenously imposed institutions. However, a significant share of players fails to implement the institution and they often perform poorly, which is why we cannot conclude that letting people choose is better than enforcing institutions from outside.

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