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Experimental departures from self-interest when competing partnerships share output

Published online by Cambridge University Press:  14 March 2025

Josh Cherry ,
Stephen Salant  and
Neslihan Uler
Josh Cherry
Affiliation:
Kellogg School of Management, Chicago, IL, USA
Stephen Salant
Affiliation:
University of Michigan, Ann Arbor, MI, USA
Neslihan Uler*
Affiliation:
University of Michigan, Ann Arbor, MI, USA
*
neslihan@umich.edu
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Abstract

When every individual’s effort imposes negative externalities, self-interested behavior leads to socially excessive effort. To curb these excesses when effort cannot be monitored, competing output-sharing partnerships can form. With the right-sized groups, aggregate effort falls to the socially optimal level. We investigate this theory experimentally and find that while it makes correct qualitative predictions, there are systematic quantitative deviations, always in the direction of the socially optimal investment. Using data on subjects’ conjectures of each other’s behavior we investigate altruism, conformity and extremeness aversion as possible explanations. We show that deviations are consistent with both altruism and conformity (but not extremeness aversion).

Keywords

Output-sharingPartnership solutionLaboratory experimentAltruismConformity

JEL classification

Q22: Fishery • Aquaculture O13: Agriculture • Natural Resources • Energy • Environment • Other Primary Products L23: Organization of Production Q20: General
Type
Original Paper
Information
Experimental Economics , Volume 18 , Issue 1: Special Issue In Honor of Elinor “Lin” Ostrom , March 2015 , pp. 89 - 115
Copyright
Copyright © 2014 Economic Science Association

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Footnotes

Electronic supplementary material The online version of this article (doi:https://doi.org/10.1007/s10683-014-9413-0) contains supplementary material, which is available to authorized users.

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