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Cooperation declines over time due to behavioral shifts, not just strategy. Periodic restarts can restore cooperation, but declines accelerate with each cycle in group lending programs.

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Area of Science:

  • Behavioral Economics
  • Development Economics
  • Social Psychology

Background:

  • Human cooperation frequently declines, even in supportive environments.
  • Existing theories often attribute cooperation decline to strategic or learning behaviors, suggesting a move towards rationality.
  • However, long-term declines may stem from systematic, time-varying deviations from rational behavior.

Purpose of the Study:

  • To investigate the dynamics of cooperation in a real-world social dilemma.
  • To identify the behavioral mechanisms driving long-term cooperation decline and recovery.
  • To analyze the impact of program restarts on cooperative behavior in group lending.

Main Methods:

  • Analysis of a five-year field study of group lending in Sierra Leone, involving 7,108 borrowers and 47,931 group payments.
  • Utilized a joint-liability contract structure creating a threshold social dilemma with free-riding incentives.
  • Supplemented quantitative data with a two-stage cluster sample of semi-structured interviews.

Main Results:

  • Observed a pattern of punctuated decline in cooperation rates, driven by behavioral mechanisms.
  • Cooperation initially high, gradually decreased due to reduced motivation and effort.
  • Sharp cooperation rebounds occurred after loan restarts, even with unchanged group dynamics, but subsequent declines accelerated over time.

Conclusions:

  • Cooperation decline is influenced by behavioral mechanisms and deviations from rationality.
  • Periodic program interventions (restarts) can temporarily restore cooperation but may lead to faster subsequent declines.
  • Findings offer insights for designing sustainable cooperative programs and institutions by addressing behavioral dynamics.