Absolute versus Relative: Asymmetric Framing and Feedback in a Heterogeneous-Endowment Public Goods Game

Abstract

Individual contributions to public goods can be framed in absolute or relative metrics. We examine the effects of asymmetric framing and informational feedback on contributions when group members are heterogeneously endowed. We develop a reference-dependent theory in which the absolute or relative contribution of others serves as a reference point. It predicts that the contribution is highest when high-income members are framed with relative metric and low-income members with absolute metric. We test our theory through an experimental design where the framing is either uniform (absolute or relative for all players) or asymmetric for players with different endowments, and information about a reference contribution level is either available or not. Experimental results confirm most of the basic treatment effects while challenge some of the asymmetric framing effects. Our study contributes to a better understanding of how endowment, framing, and feedback separately and jointly affect individual play in public goods provision.