December 2009

IZA DP No. 4643: Voting with Feet: Community Choice in Social Dilemmas

completely revised version published as 'On Cooperation in Open Communities' in: Journal of Public Economics, 2014, 120, 220–230

Economic and social interactions often take place in open communities but the dynamics of the community choice process and its impact on cooperation of its members are yet not well understood. We experimentally investigate community choice in social dilemmas. Participants repeatedly choose between a community with and an alternative without punishment opportunities. Within each community a social dilemma game is played. While the community with punishment grows over time and fully cooperates, the alternative becomes depopulated. We analyze the success of this "voting with feet" mechanism and find that endogenous self-selection is key while slow growth is less decisive.