title: Endogenous Group Formation via Unproductive Costs.
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 providereducedrates 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.
authors.affiliation: Virginia Tech Carilion Research Institute & Baylor University.
authors.forename: Jason A
authors.initials: JA
authors.lastname: Aimone
authors.affiliation: Chapman University.
authors.forename: Laurence R
authors.initials: LR
authors.lastname: Iannaccone
authors.affiliation: Johns Hopkins University.
authors.forename: Michael D
authors.initials: MD
authors.lastname: Makowsky
authors.affiliation: Chapman University.
authors.forename: Jared
authors.initials: J
authors.lastname: Rubin
keywords: C92; Club goods; D71; Endogenous group formation; Free riding; H41; Laboratory experiment; Religion; Sacrifice; Self-selection; Voluntary contribution mechanism; Z12