Abstract
We consider a modified voluntary contributions mechanism (VCM) game where the marginal per capita return (mpcr) for a group of responders is endogenously determined by the proposer. We allow the proposer to implement a mpcr that is different to the mpcr initially announced, after observing responders’ contributions. Thus, the mpcr used to determine responders’ payoffs may differ from the mpcr that was public information when responders decided their contributions. Our findings indicate that contributions increase with the announced mpcr even when the announced mpcr is non-binding. This suggests that promising a high mpcr in VCM type interactions can be successful at increasing individuals’ contributions even if the eventual mpcr that determines payoff is substantially lower. Finally, we find that the marginal gains from the above strategy can be expected to decrease with experience.
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