Experimental evidence on the theory of club goods

Abstract

We provide experimental evidence on the theory of club goods. Subjects played what we call ‘the club game’ – that is, a two-stage game: at the first stage, each player announces her favourite club size. Depending on the profile of announced club sizes, each player either joins a club of her favourite size or stays alone. At the second stage, club members play some kind of non-linear public goods game exhibiting the property that certain club sizes favour cooperation, and hence the payoffs for the players. Among other hypotheses, the central idea of club theory can be tested this way: A population of actors should partition itself in clubs of optimal size. As it turns out, this hypothesis can be validated.