Abstract
In public goods game experiments, designs implementing non-linearities in the production are less common than the standard linear setting, especially so under the assumption that the private goods production and public goods aggregation function are both non-linear. We study a voluntary contribution game (VCM) in which returns from the private project have diminishing marginal benefits and the contributions to the joint project exhibit pairwise strategic complementarities. As a control, we use a public goods game with an identical private production technology, but with the standard linear public goods aggregation. In addition to the aggregation technology, we manipulate the group size variable: In both treatments, the subjects will first play a VCM game in groups of five for 20 rounds, after which the group size is reduced to two, and the game is played for another 20 rounds. A significant over-contribution is observed in both settings when the group size is five. The rate of over-contribution is much higher under the complementary technology, but as predicted by theory, the contributions drop drastically when the group size is reduced from n = 5 to n = 2 within this treatment. Our experiment also provides empirical evidence that the so-called group size effect is present in both treatments, but it is much weaker under the standard aggregation technology.
Highlights
A voluntary contribution mechanism (VCM) is a decision environment where each individual makes a decision about how to allocate an endowment of a productive factor between private goods and public goods or a joint project that benefits all group members
The individual contributions are collected through some aggregating mechanism, and the aggregated contributions are distributed to the participants, usually in equal shares
This paper extends the research on public goods in nonlinear environments by specifying a VCM
Summary
A voluntary contribution mechanism (VCM) is a decision environment where each individual makes a decision about how to allocate an endowment of a productive factor between private goods (where consumption benefits accrue only to the individual) and public goods or a joint project that benefits all group members. The technology aggregating individual contributions can play a major role in deciding how much effort a group exerts toward a common goal This is not without real-life parallels: For an academic reader, a not too unfamiliar situation is one where the coauthors writing a scientific article consider how much effort to put in designing, analyzing and reporting the results of the study, a case in which their actions can be either strategic complements or substitutes, depending on their personal skill sets and the characteristics of the paper, and it is these factors that determine the success of the whole endeavor. We compare the observed behavior under strategic complementarities to a baseline treatment, where the public goods game has quadratic private payoffs and the standard social composition function is linear, i.e., the unweighted sum of the individual contributions In both settings, partial contribution is a unique equilibrium action. The numbers effect is much stronger in the game with strategic complementarities
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
