Abstract
Recent experimental research has shown that a policy put in place endogenously (i.e., through their votes) can be more effective at inducing cooperation in dilemma situations. This paper shows that a similar result holds when a mild sanction is implemented in a voluntary contribution dilemma. Moreover, the effect of endogenous selection of the policy influences the behavior of those concerned even in their interactions in an exogenous setting. The strongest positive democracy effects are seen with those who are favorable of introducing the policy; and especially those whose cooperative dispositions are near the median of the sample and male subjects.
Highlights
Democratic decision processes, in which rules are collectively selected by voting, are used in most societies and organizations today
There are three effects, among others, that democratic processes are known to have: the effects of a selection bias through the endogenous processes, the effects of signals sent through the voting processes, and the democracy premium, which is an effect directly influencing people’s behavior
This paper provides the first evidence that a successful democratic imposition of a policy may generate a direct effect, and a spill-over effect on behaviors of those who are involved in the democratic policy selection
Summary
Democratic decision processes, in which rules are collectively selected by voting, are used in most societies and organizations today Both empirical and experimental research suggests that the process by which a policy is implemented may change its outcome by affecting people’s level of cooperation on the relevant voted issue through various channels. Dal Bó et al (2010) and Tyran and Feld (2006) find that the democracy premium may be substantial when a policy that can resolve or mitigate a problem is successfully implemented democratically. Another possible effect that democratic policy selections may have, related to the democracy premium, is changing people’s behavior outside the democratic environment. This refers to the situation where subjects’ decisions in an environment can be influenced by their own other decisions made in different environments (e.g., Bednar et al 2012; Cason et al 2012)
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