Co-operatives exhibit greater behavioral cooperation than comparable businesses: Experimental evidence

Abstract

Cooperatives as can be presumed to rely on the economic cooperation of their members. However, game-theoretic and institutional models suggest that cooperatives may be inherently fragile due to the individual costs of cooperation. Because of this it is widely believed that organizations which rely less on cooperation may be more stable, while organizations that require cooperation may be at higher risk of folding. Therefore, if cooperatively owned or managed businesses do in fact require higher levels of prosocial and cooperative behavior than hierarchically managed firms, they must attract and maintain cooperation among participants in order to function. We hypothesized that successful consumer food cooperatives will exhibit greater generalized cooperation than conventional grocery stores. We employed an experimental dictator game to measure altruistic cooperation among consumers at a food cooperative and a comparable conventional grocery. Cooperative customers exhibit a higher base rate of cooperation than similar conventional shoppers, and this relationship holds even when taking demographic factors such as income, education, and age into account. We conclude that, when successful, consumer cooperatives exhibit greater levels of cooperation than comparable traditional businesses.