Experiments on the Dynamics of Community Formation

Citation

Robbett, Andrea (2011) Experiments on the Dynamics of Community Formation. Dissertation (Ph.D.), California Institute of Technology. doi:10.7907/X47A-P144. https://resolver.caltech.edu/CaltechTHESIS:05262011-155408617

Abstract

I study the dynamics by which populations with heterogeneous preferences for local public good provision, or for other local policies, sort themselves into communities. I conduct a series of laboratory experiments to consider whether the ability to “vote with one's feet," by moving between communities, is sufficient for a population to reach optimal public good allocations and community compositions, and to assess which institutions may best facilitate efficient self-organization when residents are able to move freely between locations.

I find that communities allowing residents to make voluntary contributions toward the provision of a public good are characterized by instability, cyclical fluctuations in local provision, and a dynamic in which low demanders continually chase high demanders through locations. Institutions requiring all residents of a community to pay equal taxes enable subjects to sort by type into stable communities. However, populations can find themselves stuck at one of two types of local, inefficient equilibria. First, though sorted, residents may fail to attain the level of public good provision best suited for them, and, in that case, the system dynamics are crucial for determining whether subjects reach the communities that offer optimally designed expenditure bundles. When residents are able to vote for local tax policies with their ballots as well as with their feet, the inefficient local equilibria are eliminated, and I find that each community converges to the most efficient outcome for its population. Second, populations may sort into an inefficient equilibrium partition of residents across communities. I find that subjects moving between locations with fixed local policies segregate by type, even when pooling their resources with similar types is more efficient. When subjects are able to vote on local policies, they typically succeed in forming communities of the optimal size and membership composition.

These experimental results suggest that the ability to vote with one's feet may not be sufficient for achieving optimal outcomes and that voting, or another mechanism by which residents may influence local policy internally, may also be necessary.

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