Communication in a threshold public goods game under ambiguity

Abstract

ABSTRACT This paper offers evidence on the impact of communication on the provision of public goods whose quality is uncertain, such as investment in prevention or fundraising in favour of non-governmental organizations (NGO). We run a laboratory experiment with two treatments, where the control variable is pre-play communication via unrestricted text chat. A binary threshold public goods game with four-person groups, threshold of three contributors and provision mechanism with elements of ambiguity is at the core of the design. A private signal linked to the real value of the public good supports the contribution decision. We find that unexpected low-valued public goods can undermine future willingness to contribute, although the benefits of communication still prevail in the form of higher public good provision. We also detect unprecedented inefficiency coming from overcontribution, given that subjects tend to neglect the free-rider problem. Chat analysis reveals that players favour the minimization of ambiguity over the maximization of the group earnings, so that we finally speculate that under uncertainty satisficing is more salient than optimizing.