Communication and Output Sharing in Common Pool Resource Environments

We study cheap-talk communication in common pool resource environments with and without output-sharing groups. Communication in groups of 12 does not improve efficiency over the non-cooperative Nash outcome without communication. Organizing subjects into output-sharing groups of four players introduces sufficient free-riding incentives to achieve full efficiency. Within-group communication decreases efficiency by countervailing the free-riding incentives induced by output sharing and enhancing between-group competition. The effects are stronger when output-sharing groups have repeated fixed membership. Adding public communication reduces the efficiency-reducing effects of within-group communication. Restricting private communication within social groups that do not share output increases efficiency to almost 100%.