Is There a Dividend of Democracy? Experimental Evidence from Cooperation Games

Thomas Markussen, Jean-Robert Tyran

Publications: Working paper

Abstract

Do democratically chosen rules lead to more cooperation and, hence, higher efficiency, than imposed rules? To discuss when such a “dividend of democracy” obtains, we review experimental studies in which material incentives remain stacked against cooperation (i.e., free-riding incentives prevail) despite adoption of cooperation-improving policies. While many studies find positive dividends of democracy across a broad range of cooperation settings, we also report on studies that find no dividend. We conclude that the existence of a dividend of democracy cannot be considered a stylized fact. We discuss three channels through which democracy can produce such a dividend: selection, signaling, and motivation. The evidence points to the role of “culture” in conditioning the operation of these channels. Accepting a policy in a vote seems to increase the legitimacy of a cooperation-inducing policy in some cultures but not in others.
Original languageEnglish
PublisherCESifo
Volume10616
Publication statusPublished - Aug 2023

Austrian Fields of Science 2012

  • 502010 Public finance
  • 502027 Political economy
  • 502057 Experimental economics

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