Democracy encourages cooperation in an infinitely public goods game under partner matching

What is it about?

Using a laboratory experiment, I showed that most groups prefer the partner matching protocol to the random matching protocol in an infinitely repeated dilemma game. In addition, subjects' levels of contributions were significantly higher when they decided to act under the partner matching protocol by voting than when they were given the same protocol exogenously. An analysis revealed that these results are robust to the type of voting rule used: the unanimity rule or the majority rule, although the impact of democracy is stronger under the majority rule than under the unanimity rule. # This paper was published at International Journal of Game Theory (vol. 48 (3), pp. 797-834).

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Why is it important?

Recent research has showed that voters may make systematic errors by underappreciating peers’ responses to a policy when undertaking voting decisions. My result implies that voters may not always underappreciate equilibrium effects. My experiment is also related to the rich literature on endogenous regrouping and partner choices. The democracy effect found in this paper implies that endogenous choices of players per se may partly account for the positive impact of endogenous group formation on improving cooperation.