Voluntary Partnerships for Equally Sharing Contribution Costs

We investigate, both theoretically and experimentally, an institutional mechanism designed to enhance cooperation. In this mechanism, contributors have the option to voluntarily contribute to the public good and decide whether to join a (sub)group where partners equally share the contribution cost. Theoretically, stable cost-sharing partnerships enhance efficiency since their partners fully contribute, while outsiders would free-ride. Our data reveal that individual joining and contribution behaviors do not always align with benchmark predictions: partnerships are not always formed, and when they are, they are not always of the optimal size; partners often contribute less than maximally, and outsiders more than minimally. Nonetheless, we document systematic evidence of partnership formation and significantly improved provision of public goods across rounds.