Abstract
Using an appropriation game setting, we examine individual responses to changes in a groups’ vulnerability to a probabilistic loss (L) of a public good. The probabilistic loss parameter entails losing 10, 50 or 90% of the value of the public good that is maintained through cooperation, where the likelihood of the loss decreases in total group cooperation. By design, the expected marginal net benefits to an individual and the expected harm to others depends endogenously on the individuals’ expectations of group cooperation and exogenously on the magnitude of the loss parameter. We find that individual cooperation is greater when forecasts of total group cooperation are greater and where the magnitude of the probabilistic loss is larger. There is, however, an interesting asymmetry in responses by two subgroups. Subjects who are pessimistic regarding total group cooperation decrease cooperation the higher the magnitude of the probabilistic loss and their decisions are tied systematically to changes in their expectations of other’s cooperation. On the other hand, subjects who are optimistic regarding total group cooperation are found to be more cooperative, but their decisions are not systematically tied to changes in expectations of others’ cooperation.
Highlights
A growing number of experimental studies focus on issues related to probabilistic losses associated with the provision or maintenance of public goods
The probabilistic loss parameter entails losing 10, 50 or 90% of the value of the public good that is maintained through cooperation, where the likelihood of the loss decreases in total group cooperation
We find that individual cooperation is greater when forecasts of total group cooperation are greater and where the magnitude of the probabilistic loss is larger
Summary
A growing number of experimental studies focus on issues related to probabilistic losses associated with the provision or maintenance of public goods. These novel results add to the emergent experimental literature that explores individual differences in the responses to marginal incentives and reciprocity (see for example, Brandts and Schram 2001; Fischbacher et al 2001; Goeree et al 2002; Brandts et al 2004; Blanco et al 2016a, b) These studies, like ours, address decisions in a menu game setting where subjects report cooperation levels for variations in marginal incentives or others’ cooperation. In contrast to the present study, that study does not examine the response to changes in the magnitude of the probabilistic loss nor does it examine differences in individual responses for optimistic and pessimistic subjects on group performance, as defined .
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
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.
