Leading by Example in a Public Goods Experiment with Benefit Heterogeneity

Jing Yu

doi:10.2139/ssrn.3624874

Abstract

Social dilemmas such as greenhouse gas emission reduction are often characterized by heterogeneity in benefits from solving the dilemma. How should leadership of group members be organized in such a setting? We implement a laboratory public goods experiment with heterogeneous marginal per capita returns from the public good and leading by example that is either implemented exogenously or by self-selection. Our results suggest that both exogenous and selfselected leadership only have a small effect on contributions to the public good. We do not find significant differences in contributions for exogenous and self-selected leadership. Leaders seem to need additional instruments to be more effective when benefits are heterogeneous.

Highlights

Social dilemma situations in which the collective interest is at odds with private interests are widespread
Since voluntary high-benefit leadership does not necessarily start in period 1, in the following we mainly focus on exogenous high-benefit leadership and explore the reasons for group heterogeneity in performance in HBL.18
This paper examined the effect of leading by example on cooperation when individuals have different benefits from the group account by using a linear public goods experiment

Summary

Introduction

Social dilemma situations in which the collective interest is at odds with private interests are widespread. Cooperation among decision makers leads to the Pareto optimum, but free riding is a dominant strategy and results in a Pareto inferior outcome. Economists have analyzed social dilemmas in the context of public goods provision. The simultaneous linear public goods game ( known as the voluntary contribution mechanism) has been the main workhorse to study cooperation empirically (Isaac et al, 1985; Ledyard, 1995; Chaudhuri, 2011). A general finding from economic experiments on the public goods game is that decision makers are willing to cooperate, i.e. willing to contribute voluntarily to the public good, but that cooperation declines over time unless there is an enforcement mechanism such as punishment

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Results

Conclusion