Deliberation, Democracy, and Mechanisms for Cooperation

Abstract

This thesis explores group decision-making and mechanisms to encourage cooperation through three experimental studies.

Study one uses a public goods game (PGG) with informal and formal sanction mechanisms to understand how team decision-making differs from individual decision-making in a democratic institutional setting. Teams consistently outperform individuals when sanctioning schemes are available, by selecting higher sanction rates when choosing the formal scheme and pro-socially targeting punishment toward low-cooperators when using the informal scheme. This improved decision-making appears to be a result of deliberation and has implications for using team decision-making to overcome moral hazards.

Building on this, study two examines team behaviour in a real effort experiment to understand the impact of democratic decision-making. Specifically, in one treatment teams may vote on whether to implement a policy that reduces the returns from free-riding within their group, while in the other treatment, this policy is randomly implemented. Teams exhibit significantly higher productivity when they are able to democratically decide whether to implement the policy, regardless of the vote outcome. While teams in these treatments also increase their time free-riding, the higher productivity compensates for this and so it does not harm overall production. As in the first chapter, this study highlights the benefits of autonomous team-decision making in improving cooperation.

Study three explores how a group may encourage cooperation to prevent a more costly problem in a two-stage PGG. Subjects complete real effort tasks that either reward them directly or improve the payoff schedule in the following stage, forming a second-order social dilemma. Free-riding does not dominate the pre-stage nor does cooperation decline as strongly as observed in other PGG, demonstrating how leveraging fewer resources to overcome related social dilemmas can make cooperation easier. Further, providing a simple cost- and ramification-free feedback mechanism considerably increases the level of cooperation observed.