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Stability and welfare of 'merit-based' group-matching mechanisms in voluntary contribution game

Nax, Heinrich H., Murphy, Ryan O. and Helbing, Dirk (2014) Stability and welfare of 'merit-based' group-matching mechanisms in voluntary contribution game. . Eidgenössische Technische Hochschule Zürich, Zurich, Switzerland.

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We study the stability and welfare properties of merit-based (meritocratic) group-matching mechanisms in voluntary contribution games. Meritocratic matching in this context means that players tend to be assortatively grouped according to their contributions. We let regimes di ffer from one another with respect to their matching fidelity. The stability analysis summarizes as follows. When there is not enough meritocracy, the only equilibrium state is universal free-riding. Above a first threshold, several Nash equilibria above free-riding emerge, but only the free-riding equilibrium is stochastically stable. There exists a second meritocratic threshold, above which an equilibrium with high contributions becomes the unique stochastically stable state. This operationalization of meritocracy sheds light on critical transitions, that are enabled by contribution-assortative matching, between equilibria related to "tragedy of the commons

Item Type: Monograph (Working Paper)
Official URL:
Additional Information: © 2014 The Authors
Divisions: CPNSS
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HC Economic History and Conditions
Q Science > QA Mathematics
JEL classification: C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C73 - Stochastic and Dynamic Games; Evolutionary Games; Repeated Games
D - Microeconomics > D0 - General > D02 - Institutions: Design, Formation, and Operations
D - Microeconomics > D6 - Welfare Economics > D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
Date Deposited: 22 Feb 2016 11:09
Last Modified: 26 Mar 2024 12:27

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