Association for Public Policy Analysis & Management

Can the design of intergovernmental agreements crowd in or crowd out cooperation among member governments? Research in behavioral economics finds that if cooperative behavior is to be crowded in, attention must be paid to matching material incentives with moral sentiments. This matching occurs through the design of institutional arrangements that encourage incentives and norms to work in tandem. Likewise, common pool resource theory suggests that this is more likely to be accomplished if common pool resource users are engaged in rule creation, application, and revision. Monitoring, conflict resolution, and graduated sanctioning mechanisms, with resource user involvement, create information rich environments that encourage cooperation while reassuring individuals that they will not be exploited.

These arguments relate to individuals, but do they hold when the actors are governments? Can the design of an intergovernmental agreement crowd in or crowd out cooperative behavior? These questions are addressed by drawing upon a member survey as well as fine grained institutional data on the New York City Watersheds Governing Agreement, which includes over forty governments providing sixty-six public goods related to water quality and economic development. The analysis of the institutional data examines the types and designs of public goods arrangements and how they change over time. The expectation is that crowding in behavior should be characterized by longer time horizons (e.g. longer periods of time between program reviews), greater exercise of discretion through less constraining rules, and the adoption of programs that address problems and core concerns of the parties. In addition, shared decision making arrangements, monitoring, conflict resolution venues, and sanctioning are examined to test whether their design reflects features that scholars argue support cooperation, in particular, whether they are likely to create information rich environments. Finally, survey questions on participants’ perceptions of trust, fairness, and responsiveness as well as the performance of the governing arrangement will be used to assess the levels of trust and reciprocity. Both sets of data (institutional and survey) will shed light on institutional design and cooperative behavior among participants in an intergovernmental arrangement.