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Do binding agreements solve the social dilemma ?

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  • Emmanuel Sol

    (LAMETA - Laboratoire Montpelliérain d'Économie Théorique et Appliquée - UM1 - Université Montpellier 1 - UPVM - Université Paul-Valéry - Montpellier 3 - INRA - Institut National de la Recherche Agronomique - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier)

  • Sylvie Thoron

    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

  • Marc Willinger

    (LAMETA - Laboratoire Montpelliérain d'Économie Théorique et Appliquée - UM1 - Université Montpellier 1 - UPVM - Université Paul-Valéry - Montpellier 3 - INRA - Institut National de la Recherche Agronomique - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier)

Abstract

We investigate whether "binding agreements" can provide a solution to the social dilemma that arises in the presence of pure public goods. By signing a binding agreement, players can prevent free riding by the contributors to a public good. However, a well known theoretical result is that the outcome of the endogenous formation of agreements is not necessarily efficient. In our setting, the individual level of contribution to the public good increases with the size of the coalition reaching an agreement and the global coalition is always the socially optimal structure. Agreements form sequentially and the equilibrium outcome is an asymmetric structure, which consists of two coalitions. Our experiment therefore lends force to the theoretical result that outcomes may be inefficient. In fact, we observe an outcome which is even less efficient than that predicted by the equilibrium agreement structure. However, it seems that when subjects reach agreements they do so with the intention of cooperating rather than free riding. Furthermore, it seems that they "learn to cooperate" over time and reach the global agreement more often towards the end of sessions.Keywords

Suggested Citation

  • Emmanuel Sol & Sylvie Thoron & Marc Willinger, 2006. "Do binding agreements solve the social dilemma ?," Working Papers halshs-00410776, HAL.
    • Handle: RePEc:hal:wpaper:halshs-00410776
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00410776
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    5. Roman Trötschel & Marie van Treek & Caroline Heydenbluth & Kai Zhang & Johann M. Majer, 2022. "From Claiming to Creating Value: The Psychology of Negotiations on Common Resource Dilemmas," Sustainability, MDPI, vol. 14(9), pages 1-26, April.

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