Institutions for Facilitating Cooperation: Evidence from Economics Experiments on Public Goods, Common-Pool Resources and Team Production Environments

Abstract

"Over the past 30 years, applied microeconomics has seen an explosion in the use of experimental methods as a tool for observing economic behavior. Economic experiments serve as a complement to field research using, allowing the researcher to create and control key theoretically based rules of decision making and incentives. Experimental economic environments are designed to create the incentive systems of alternative market and nonmarket economic institutions, allowing the researcher to examine propositions related to static equilibrium theory, dynamic learning models, and individual choice theory. Economic incentives are most often created via salient cash rewards designed to induce the incentive properties of the economic problem under investigation.

"This paper deals with behavior in an institutional setting referred to as a social dilemma. We begin by considering the following resource allocation problem that might be implemented in an experimental laboratory decision-making experiment."