Groups, Commons and Regulations: Experiments with Villagers and Students in Colombia

Abstract

Group externalities imply a situation where individual and group interests are not aligned and therefore require the design of rules or institutions that correct the failure in order to improve social outcomes. Public goods, team work, the use of natural resources under joint access, or any pollution problems, are examples of such potential divergence between individual and group incentives. Institutional corrections can come exogenously from a regulatory state that brings in command and control or incentive mechanisms (pecuniary or not-pecuniary), or that reassigns property rights to correct the failure. But solutions can also emerge endogenously from the group, through self-governed institutions, with similar mechanisms of material or non-material incentives, as well as social norms or conventions.

* This research was made possible through a Research and Writing Grant from the John D. and Catherine T. Macarthur Foundation and a grant from the Network on Social Norms and Preferences headed by Herbert Gintis and Robert Boyd. I thank them for their support. Thanks are also due to Ernst Fehr in particular for providing important insights for the experimental design; to the Santa Fe Institute for an International Fellowship, and to the School of Environmental and Rural Studies at Javeriana University (Colombia) during my field work. I also thank Maria Claudia Lopez, Pablo Ramos and Ana Marfa Roldán for assistance in the field and in processing data. Diana Maya provided important inputs in the analysis of qualitative data. I am also grateful to Maria Alejandra Velez and the editors of this volume (in particular Bina Agarwal) for their valuable comments that helped improve this manuscript.