Abstract
We experimentally analyze the effect of the endogenous choice of sanctioning institutions on cooperation and migration patterns. Subjects are assigned to one of two groups, are endowed with group-specific preferences, and play a public goods game. We compare an environment in which subjects can move between groups and vote on whether to implement sanctions, to one in which only one group is exogenously endowed with sanctions. We find that the possibility of voting leads to a more efficient partition of subjects across groups, higher payoffs, lower inequality, and lower migration rates. Over time, subjects tend to vote for institutions.
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