Document Type
Article
Publication Date
6-3-2013
Abstract
Sacrifice is widely believed to enhance cooperation in churches, communes, gangs, clans, military units, and many other groups. We find that sacrifice can also work in the lab, apart from special ideologies, identities, or interactions. Our subjects play a modified VCM game—one in which they can voluntarily join groups that provide reduced rates of return on private investment. This leads to both endogenous sorting (because free-riders tend to reject the reduced-rate option) and substitution (because reduced private productivity favours increased club involvement). Seemingly unproductive costs thus serve to screen out free-riders, attract conditional cooperators, boost club production, and increase member welfare. The sacrifice mechanism is simple and particularly useful where monitoring difficulties impede punishment, exclusion, fees, and other more standard solutions.
Recommended Citation
Aimone, Jason A., Laurence R. Iannaccone, Michael D. Makowsky, and Jared Rubin. "Endogenous group formation via unproductive costs." The Review of economic studies 80.4 (2013): 1215-1236.
DOI:10.1093/restud/rdt017
Peer Reviewed
1
Copyright
Wiley
Comments
This is the accepted version of the following article:
Aimone, Jason A., Laurence R. Iannaccone, Michael D. Makowsky, and Jared Rubin. "Endogenous group formation via unproductive costs." The Review of economic studies 80.4 (2013): 1215-1236.
which has been published in final form at DOI: 10.1093/restud/rdt017.