Fairness and inequality in institution formation

  • A key solution for public good provision is the voluntary formation of institutions that commit players to cooperate. Such institutions generate inequality if some players decide not to participate but cannot be excluded from cooperation benefits. Prior research with small groups emphasizes the role of fairness concerns with positive effects on cooperation. We show that effects do not generalize to larger groups: if group size increases, groups are less willing to form institutions generating inequality. In contrast to smaller groups, however, this does not increase the number of participating players, thereby limiting the positive impact of institution formation on cooperation.

Download full text files

Export metadata

Author:Julian Detemple, Michael KosfeldORCiDGND
Series (Serial Number):SAFE working paper (402)
Place of publication:Frankfurt am Main
Document Type:Working Paper
Year of Completion:2023
Year of first Publication:2023
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2023/10/06
Tag:Institution formation; group size; social; social dilemma
Edition:August 24, 2023
Page Number:67
We gratefully acknowledge support from the Experiment Center at the Leibniz Institute for Financial Research SAFE.
Institutes:Wirtschaftswissenschaften / Wirtschaftswissenschaften
Wissenschaftliche Zentren und koordinierte Programme / House of Finance (HoF)
Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS)
Wissenschaftliche Zentren und koordinierte Programme / Sustainable Architecture for Finance in Europe (SAFE)
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
JEL-Classification:C Mathematical and Quantitative Methods / C9 Design of Experiments / C92 Laboratory, Group Behavior
D Microeconomics / D0 General / D02 Institutions: Design, Formation, and Operations
D Microeconomics / D6 Welfare Economics / D63 Equity, Justice, Inequality, and Other Normative Criteria and Measurement
H Public Economics / H4 Publicly Provided Goods / H41 Public Goods
Licence (German):License LogoDeutsches Urheberrecht