Linear Public Goods Experiments Research Articles

Voluntary contributions in a system with uncertain returns: a case of systemic risk

This paper investigates systemic risk that emerges from the interplay between uncertain returns to individual actions, uncertainty on others’ behavior and all this filtered through individual attitudes toward risk. We design a finitely repeated linear public good experiment based on a voluntary contribution mechanism and analyze the effect of risky and uncertain returns on subjects’ contributions. Results from a baseline treatment without uncertainty are compared with two risky treatments characterized by different values for the marginal per capita return. In the treatments with risk, subjects are randomly assigned to one out of three feasible marginal per capita returns, independently of what their individual contribution was. Results show that a sufficient level of uncertainty leads to significantly lower individual contributions. Furthermore, in a system with lower contributions due to uncertainty, subjects’ risk aversion enhances the systemic risk, leading the system to collapse.

Contributions in linear public goods experiments with stranger matching: two motivations

ABSTRACTWe investigated why subjects contribute to the public good in a linear public goods game with stranger matching. In this experiment, subjects were asked to determine their contributions to the public good and also their beliefs about their partners’ contributions. Additionally, the subjects were asked to note the reason for their decisions in real time. We used the subjects’ descriptions for a coding analysis, which is a classification method of the motivations. Integrating this coding methodology and behavioural data revealed that full contributions are the result of two motives. One is the conditional cooperation motive to achieve the socially optimal outcome. The other is the motive to lead the other group member to contribute all of their endowment in the following periods by signalling one’s own act (i.e. a teaching motive). The study further reveals that the two identified motives play a key role in driving cooperative behaviour, and that other motives (such as confusion and altruism) play a minor role.

The difference between Partners and Strangers designs in public goods experiments

Purpose – The purpose of this paper is to focus on conditional cooperation and investigate whether the difference in contributions between Partners and Strangers designs in linear public goods experiments can be explained by differences in beliefs. Design/methodology/approach – The author conducted linear public goods experiments by using Partners and Strangers designs with belief eliciting their group member’s contributions. Findings – The author shows that the difference in the magnitude of the responsiveness of contribution to belief (i.e. the marginal contribution to belief) creates different contribution levels in Partners and Strangers designs. Research limitations/implications – The presented results imply that having a strategic motive increases contributions by increasing the magnitude of the responsiveness of contribution to belief rather than by raising belief level. Originality/value – The main claim of this paper is that “marginal contribution to belief” rather than “belief level” causes the difference in contribution levels between Partners and Strangers. This is the first proven evidence of a difference in belief between Partners and Strangers.

Public disclosure for carbon abatement: African decision-makers in a PROPER public good experiment

A linear public good experiment adopted from Holt and Laury [1997. Classroom games: Voluntary provision of a public good. Journal of Economic Perspectives, 11(4), 209–215.] has been employed to investigate strategic behaviour in pollution abatement among African climate decision-makers. The experiment consisted of three groups, of which groups 2 and 3 received one and two treatments, respectively. The first treatment entailed publicly disclosing the pollution of each member of a group by placing a corresponding colour-coded card in front of each subject, while the second involved the withdrawal of the public disclosure. Group 2 received the first treatment; Group 3 received both the first and second treatments in succession. We found that the untreated group (baseline) polluted more than the two treated groups, and there was no statistically significant difference between the pollution abatement of the two treated groups. These results suggest that public disclosure potentially drives pollution abatement and that its eventual withdrawal does not obliterate abatement behaviour. We did not observe conditional cooperation but average pollution declined over time. Furthermore, individuals who thought it was unfair for Africa to reduce emissions polluted more. We also found that pollution levels differ significantly between males and females.

Who are the voluntary leaders? Experimental evidence from a sequential contribution game

We rely on the methodology of Fischbacher et al. (Econ Lett 71(3):397–404, 2001) in order to identify subjects’ behavioral types. We then link the likelihood to act as a leader in a repeated public goods game to the elicited behavioral types. The leader in a group is defined as the subject who voluntarily decides in the first place about his contribution. The leader’s contribution is then reported publicly to the remaining group members who take their contribution decisions simultaneously. Our main findings are that leaders emerge in almost all rounds and that subjects who are identified as conditional cooperators are more likely to act as leaders than other types, e.g., free-riders or triangle-contributors. We also find that voluntary leaders, irrespective of their behavioral type, contribute always more than followers. However, the presence of leadership does not prevent the decay that is commonly observed in linear public goods experiments.

Endogenous and costly institutional deterrence in a public good experiment

Modern societies rely on formal, central authority institutions that regulate the behavior of all members of society. This paper investigates the formation of a central authority regime within a linear public good experiment. The institution is funded by a fixed cost that increases with the level of deterrence, which is specified as the number of group members who are likely to be monitored. The level of deterrence is both exogenously and endogenously determined, allowing investigation of the effect of endogenous selection. The results indicate no significant positive endogenous selection effect. Indeed, in contrast to the existing literature, when a non-deterrent central authority is endogenously determined contributions tend to decrease.

Cooperation and the Boundaries of the Firm: A Framed-Field Experiment

This paper studies the effect of firm boundaries on inter-individual cooperation in corporate settings. I conduct a framed-field linear public good game experiment in the natural environment of the workplace. I use information about the actual boundaries of two firms, which are a parent firm and its subsidiary. I document differences in the overall level of cooperation across the parent firm, its subsidiary, and an intra-corporate group that comprises players from both the parent firm and the subsidiary. In stark contrast to previous results, I find that cooperation is increasing over time within the parent firm, indicating that firms can foster stronger cooperation within their boundaries. In other treatments the standard declining cooperation is not rejected. Overall, I find higher levels of contribution to the public good relative to conventional laboratory experiments. I estimate the importance of individuals' identity and find that higher weight placed on identity is associated with higher contributions, but only within the parent firm. Higher levels of self-awareness can help explain patterns of cooperation within the boundaries of the firm.

You are in Charge: Experimentally Testing the Motivating Power of Holding a (Judicial) Office

Judicial decisions are constitutionally protected from governmental interference. In many legal orders judges are appointed for life. In terms of principal agent theory, one should therefore expect a severe moral hazard problem. Judicial practice seems to reject this prediction. A rich literature in law and political science has tried to dissolve this 'puzzle of judicial behavior'. This literature mainly uses two strategies: it interprets the institutional arrangement in which judicial choice is embedded as a set of constraints. Or it claims that the legal system succeeds in selecting individuals who are particularly conscientious. We design an experiment that excludes both explanations. We give selfishness its best chance. Specifically we run a linear public good experiment with an additional participant randomly singled out as authority. The authority alone is able to punish free-riders. Yet for the authority, punishment is costly. We find a strong motive to fulfill the expectations that go with the office. Authorities do not save the money for punishment. They do not use punishment either to be spiteful. Yet the way how they interpret this task is influenced by their social value orientation. Personality moderates the willingness to assume the assigned office.

‘Expressive’ obligations in public good games: Crowding-in and crowding-out effects

We study individual contributions in a repeated linear public good experiment in which, in each period, subjects are required to contribute a minimum amount and face a certain probability of being audited. Audited subjects who contribute less than the required amount are convicted to pay the difference between the obligation and the voluntary contribution. We investigate the ‘expressive’ force of the obligations. While at early stages subjects contribute the minimum level, with repetition contributions decline below the required amount. We observe that expressive obligations exert a rather robust crowding-out effect on voluntary contributions as compared to a linear public good game. Crowding-out is stronger when payments collected through the auditing procedure are distributed to subjects rather than when they are a deadweight loss.

Pareto meets Olson – A Note on Pareto-optimality and Group Size in Linear Public Goods Games

Summary In this paper I examine the relationship between Pareto-optimality and group size in linear public goods games or experiments. In particular, I use the standard setting of homogeneous linear public goods experiments and apply a recently developed tool to identify all Pareto-optimal allocations in such settings. It turns out that under any conceivable circumstances, ceteris paribus, small groups have a higher Pareto-ratio (Pareto-optimal allocations over total allocations) than large groups. Hence, if Pareto-optimality of an allocation is a property that makes such allocations acceptable and maintainable, small groups will find is easier to provide Pareto-optimal amounts of a public good than large groups. This is a novel reasoning for Mancur Olson′s claim, in particular, with respect to what he has termed inclusive goods and inclusive groups.

Sustaining cooperation in laboratory public goods experiments: a selective survey of the literature

I survey the literature post Ledyard (Handbook of Experimental Economics, ed. by J. Kagel, A. Roth, Chap. 2, Princeton, Princeton University Press, 1995) on three related issues in linear public goods experiments: (1) conditional cooperation; (2) the role of costly monetary punishments in sustaining cooperation and (3) the sustenance of cooperation via means other than such punishments. Many participants in laboratory public goods experiments are “conditional cooperators” whose contributions to the public good are positively correlated with their beliefs about the average group contribution. Conditional cooperators are often able to sustain high contributions to the public good through costly monetary punishment of free-riders but also by other mechanisms such as expressions of disapproval, advice giving and assortative matching.

'Expressive' Obligations in Public Good Games: Crowding-In and Crowding-Out Effects

We study individual behaviour in a repeated linear public good experiment in which, in each period, subjects are required to contribute a minimum level and face a certain probability to be audited. Audited subjects who contribute less than the minimum level are convicted to pay the difference between the obligation required and the voluntary contribution. We study the 'expressive' power of the obligations. While at early stages subjects contribute the minimum level, with repetition contributions decline below the required amount indicating that expressive obligations are not capable to sustain cooperation. We observe that expressive obligations exert a rather robust crowding-out effect on voluntary contributions as compared to a standard public good game. The crowding-out is stronger when payments collected by the monitoring activity are distributed to subjects rather than when they are pure dead-weight-loss. The work was supported by a grant from MIUR (Ministero dell’Istruzione, dell’Universita e della Ricerca).

Ostracism and the provision of a public good: experimental evidence

We analyze the effects of ostracism on cooperation in a linear public good experiment with fixed partner design. Our results show that introducing ostracism increases contribution levels significantly except in first and last periods. Despite reductions in group size due to ostracism, the net effect on earnings is positive. This effect is in contrast to most alternative mechanisms aimed at increasing cooperation rates studied in the literature on public good experiments.

Ostracism and the Provision of a Public Good - Experimental Evidence

We analyze the effects of ostracism on cooperation in a linear public good experiment with fixed partner design. Our results show that introducing ostracism increases contribution levels. Despite reductions in group size due to ostracism, the net effect on earnings is positive and significant. This effect is in contrast to alternative mechanisms aimed at increasing cooperation rates studied in the literature on public good experiments.

Linear Public Goods Experiments: A Meta-Analysis

Objective :T ouse meta-analysis techniques to assess the impact of various factors on the extent of cooperation in standard linear public goods experiments using the voluntary contributions mechanism. Data Sources: Potentially relevant experiments were identified through searches of EconLit, the Internet Documents in Economics Access Service (IDEAS), and a survey article. Review Methods :A total of 349 potentially relevant studies were identified. Of these, 27 (representing a total of 711 groups of participants) met the inclusion criteria. Data were abstracted from these studies using a standardized protocol. Results were analyzed using weighted ordinary least squares. Average group efficiency was the dependent variable. Results: The marginal per capita return, communication, constant group composition over the session (“partners”), positive framing, and the use of children as subjects had a positive and significant effect ( p < 0.05) on the average level of contribution to the public good. Heterogeneous endowments to subjects, experienced participants, and soliciting subjects’ beliefs regarding other participants’ behaviour prior to the start of the session/period had an egative and significant effect. A number of other factors were not identified as significant. Conclusion: The meta-analysis results parallel several key findings from previous literature reviews. In addition, they offer parameter estimates and an analysis of significance based on the totality of the available research evidence. More consistent reporting of the results of experiments would greatly improve the ability to conduct this type of research.

Altuism, reputation and noise in linear public goods experiments

We report an experiment using a design that permits the direct measurement of individual decision rules in voluntary contribution games. We estimate the distribution of altruism in our subjects and find that observed ‘overcontribution’ is attributable to a combination of random variation in behavior and a few altruistic players. We also employ Andreoni's partners/strangers design to measure reputation effects. The only difference observed is that the strangers treatment produces slightly more random variation in behavior. Our results explain some anomalies about contribution rates, and support past findings that reputation-building plays a minor role in such experiments.