Efficacy = endowment × efficiency: Revisiting efficacy and endowment effects in a public goods dilemma.

Abstract

This article reexamines the efficacy and endowment effects in public good (PG) dilemma by conceptualizing that efficacy = endowment x efficiency. Endowment is the resource that a person can contribute. Efficiency is the impact of a unit of endowment. Efficacy is the total impact of contribution. The authors used a group project scenario to simulate a continuous contribution PG dilemma. The 2 x 2 x 2 x 2 experimental design manipulated own efficiency and own endowment as within-subject variables and the other persons' efficiency and endowment as between-subject variables. Results indicate that cooperation was mainly affected by one's endowment and others' efficiency. The authors distinguished among 3 types of efficiency effects: (a) an own-absolute-efficiency effect that efficient people put in more effort regardless of others' efficiency, (b) an other-absolute-inefficiency effect that people put in more effort when others are inefficient, and (c) a relative-inefficiency effect that inefficient people put in less effort in the presence of efficient people. Contrasting previous robust findings on efficiency, they identified a situation in which efficiency has no effects--when one has more endowment than do others.