Communication in a Commons: Cooperation Without External Enforcement

"The experiments reported in this paper provide strong evidence for the power of face-to-face communication in a repeated common-pool resource environment where decisions are made privately. When communication was provided as a 'costless' institution, players successfully used the opportunity to: (a) calculate coordinated rent improving strategies, (b) devise verbal agreements to implement these strategies, and (c) deal with non-conforming players. "In field settings, it is rare that the opportunity to communicate is costless. Someone has to invest time and effort to create and maintain arenas for face-to-face communication. The cost of providing an arena for communicating has not been overtly considered in previous experimental work. We report the results from a series of experiments designed to investigate the affect of costly provision of the communication mechanism on: a) the ability of players to provide the mechanism; and b) the impact of the second order dilemma in solving the first order dilemma posed by the common pool environment itself. In summary, the provision problem players faced in the costly communication experiments was not trivial and did in fact create a barrier. In all three experiments, the problem of providing the institution for communication diminished the success of either: (a) having the ability to develop a coordinated strategy and/or (b) dealing with players who cheated on a previous agreement. On the other hand, all groups succeeded to some degree in providing the communication mechanism and in significantly improving the efficiency of resource allocation decisions."