Playing with Other People’s Money: Contributions to Public Goods by Trustees

Abstract

Decisions about the level and allocation of public goods in the real world are frequently made by representatives or trustees, rather than by the contributors themselves. We design and conduct an experiment to test the difference between contributions made by trustees vis-a-vis contributions made with one's own endowment. We explore the patterns of decisions made by subjects in the two games, distinguishing between altruistic and reciprocal actions, and unpacking the potential heterogeneity of other-regarding preferences that motivate the contributions we observe. We find that subjects tend to contribute more when acting as trustees than when they are playing with their own money. Further, and consistent with “warm glow” theories of altruism, trustees more frequently conditionally contribute more than the rest of the group and unconditionally contribute more than they expect from others.