Promoting cooperation in collective actions: Evidence from the reserve fund for maintenance in China

Abstract

Cooperation among group members is the ultimate pursuit in any collective actions. Despite the presence of well-documented theories and experimental evidence in the collective action problem, the empirical evidence on promoting cooperation in the problem is scarce. We examine the collective tasks of using reserve funds for maintenance in urban residential areas using a unique administrative data that covers approximately 5,000 maintenance projects in Nanjing, China. Applying an instrumental variable approach, we show that a 1,000 yuan increase in extra cash payment increases the consent rates of implementing a maintenance plan by approximately 1 percentage point. Our results suggest that additional information revealed by uncovered maintenance costs could serve as a non-monetary tool to promote cooperation in making collective-action decisions. We confirm the conjecture by surveying 112 householders involved in the maintenance projects.