Public Goods Problem Research Articles

The Impact of Praise on Cooperative Behavior in Three-Player Public Goods Games and Its Gender Differences.

Previous research has primarily focused on static factors influencing cooperative behavior in social dilemmas, with less attention given to dynamic factors within group social interactions, such as positive feedback received during interactions, i.e., praise. This study, through a between-subjects online experiment with a single-factor, two-level design (praise: public praise/no praise), investigates the impact of praise on cooperative behavior changes across two rounds of a three-player public goods problem. Results revealed the following: (1) A positive correlation between individuals' contributions across two rounds and a negative correlation with the number of correct answers in rule comprehension questions were evident; for men, a correlation between rule comprehension and first-round contributions was observed. (2) Multilevel model results showed that praise, role, and rule comprehension significantly positively affected contribution changes across two rounds; gender did not significantly affect contribution changes. Specifically, under public-praise conditions, contribution changes were greater. Publicly praised individuals showed positive or negative behavior changes, while those not praised in the same group showed positive changes. Men contributed significantly more in the first round than women, with no gender difference found in contribution changes. Rule comprehension positively predicted contribution changes, indicating that more correct answers led to greater positive changes in contributions. These results not only support the inferential social learning perspective, suggesting that through praise, individuals can infer external world perceptions and self-evaluations, affecting both the praised (positively or negatively) and positively influencing non-praised individuals in the same group, but also provide a theoretical basis and intervention strategies for team and organizational management in groups.

Group Incentives for the Public Good: A Field Experiment on Improving the Urban Environment

Abstract What strategies can help communities to overcome the public goods problem in the maintenance of communal spaces and infrastructure in urban environments? This paper investigates whether an intervention targeted at Community-Based Organizations can motivate them to make increased contributions to the public good, thereby improving outcomes for the community as a whole. Using a randomized controlled trial conducted in Dakar, Senegal, the analysis tests the effectiveness of a program that provides incentives to community groups to encourage them to keep their neighborhoods clean, with the ultimate goal of reducing flooding. After one year, the intervention proved to be effective in engaging communities, improving cleanliness, and reducing flooding.

Evidence from Albania: local government, public goods, and the free-rider problem

Public goods and their benefits are necessarily related to their nature. From an economic point of view, citizens are always looking for more and more public goods, judging that they should always finance them even less. Especially in a democracy, it is sufficient to remember that people who don't vote still benefit from the government's agenda. Mainly in developing countries and especially in ex-communist ones, the public does not have enough literacy and interest to understand the issues of public finance, political economy, the fiscal system, legal and political systems, social paradigms, and economics. So, it generally attributes the provision of public goods necessarily to the central and local governments without understanding or knowing any of the elements of the public goods ecosystem. So it seems that everything that the local government provides must be of high quality and be free, which proves evidence and traces of one of the main problems of public goods, which is the free-rider problem. From the research point of view, regardless of the moderation made by the civil society for the awareness of the social contract as well as the transparency of the economic activity of the municipalities, the citizens' awareness about the nature and problems of the provision of public goods still remains a concern. Therefore, the purpose of this article is to address the free-rider problem as an issue that must be recognized and considered so that optimal local legal regulations can be formulated, especially in small communities like Vlora municipality, where the free-rider problem is on a smaller scale compared to larger municipalities in the world.

Cooperation, punishment, and group change in multilevel public goods experiments

Peer punishment is regarded as an important element in sustaining human cooperation for public good provision. Many behavioral experiments have shown that public good provision is higher if cooperation norms can be enforced by peer punishment. These experiments predominantly focus on single-group public goods, in which people have to choose between their private interests and the interests of their group. However, many societal problems comprise multilevel public goods problems, where multiple local groups are nested within a larger global group. We study experimentally how punishment affects cooperation and norms in multilevel public goods games. In our lab experiment, two local groups are nested within a larger global group. Participants have to choose between not contributing, contributing locally, and contributing globally. Local contributions would lead to a fragmented outcome where two separate local public goods are provided, whereas global contributions would lead to a unified global good that benefits all. Moreover, we study whether cooperation and punishment patterns depend on the type of public good participants are initially exposed to: single-group or multilevel. Participants either begin in a single-group public goods game and then shift to a multilevel public goods game or vice versa. We find that punishment is less effective in multilevel public goods games than in single-group public goods games. Punishment only promotes cooperation in multilevel public goods games if people have prior experience with solving single-group public goods games. Our results refine the boundary conditions for the effectiveness of punishment and suggest that ‘starting small’ by first solving single-group public goods problems is helpful for successful multilevel public good provision.

Implementation in undominated strategies with applications to auction design, public good provision and matching

This paper considers implementation in undominated strategies by finite mechanisms, where multiple outcomes may be implemented at a single state of the world. We establish a sufficient condition for implementation applicable in a general environment with private values. We apply it to three well-known environments and obtain strikingly permissive results. In the single-object auction, the second-price auction with a reserve price can be outperformed in terms of revenue. In the public good provision problem, the Vickrey–Clarke–Groves mechanism can be outperformed from the viewpoint of a designer who wishes to minimise deficit subject to efficiency. In the two-sided matching environment where preferences on one side of the market are private information, the social choice correspondence that outputs all stable matchings at every preference profile, is implementable.

Induced Innovation and International Environmental Agreements: Evidence from the Ozone Regime

Abstract This paper revisits one of the rare success stories in global environmental cooperation: the Montreal Protocol and the phase-out of ozone-depleting substances. I show that the protocol increased science and innovation on alternatives to ozone-depleting substances and argue that agreements can indeed be useful in solving global public goods problems. This contrasts with game-theoretical predictions that agreements occur only when costs to the players are low and with the often-heard narrative that substitutes were readily available. I reconcile theory and empirics by discussing the role of induced innovation in models of environmental agreements.

Animal welfare as a public good

We study a simple model of consumption of animals in which consumers exhibit altruism towards animals. Consumers can choose both the quantity and the quality of animal lives. This model gives rise to a public good problem: at the market equilibrium, quality is too low, and quantity is too high when animal lives are not worth living. We discuss some implications of our results and the significance of our modeling choices for the future landscape of economic research on animal welfare.

Zero is hero: Round number effects on knowledge-sharing platforms

With the inherent public goods problem embedded in knowledge-sharing platforms, various incentive mechanisms have been implemented, most of which are in the form of gamified elements. Among those motivating elements, reputation points are the most direct feedback about individuals’ contribution effort, which use numerical units indicating progress. Although some research has found that points can incentivize users to contribute, empirical evidence regarding the influential patterns of such numerical units remains limited. Drawing on numerical cognition literature that an individual's evaluation and judgments may be influenced by certain numerical cues, we particularly focus on the round number bias on knowledge-sharing platforms. Several hypotheses regarding users’ behavioral changes when their accumulated points approach round numbers have been proposed, including their contribution level, contribution quality, and writing style. By analyzing data collected from StackOverflow.com, we find that users perceive round numbers as category boundaries or endpoints and crossing such boundaries can motivate aspirational behaviors. Concretely, users significantly increase their post frequency and length, and write answers with more function words and second-person pronouns. Meanwhile, their posts will be more likely to be accepted as the best answers and gain more votes. We also explore the moderating effects of advanced explicit incentives and numbers’ magnitude. Theoretically, our research contributes to a body of literature on knowledge-sharing platform incentive mechanisms to motivate users’ contributions and sheds light on the utilization of numerical cues to guide individuals’ behaviors in user-generated-content (UGC) provision context.

Civic engagement, the leverage effect and the accountable state

A classic solution to the problem of public goods (PG) is their provision through a strong state with the power to collect taxes and to mete out penalties for non-compliance. The need for voluntary collective action remains, however, because binding the state to citizen's interests requires the latter's civic engagement. As a public good in its own right, economic theory expects civic engagement to be underprovided. We conduct the first laboratory experiment in which participants can create a socially efficient central sanctioning scheme (representing the accountable state) through a prior stage of voluntary costly actions that are theoretically ruled out for strictly self-interested agents—a social dilemma. Our experimental subjects sustain civic engagement when its cost is modest, suggesting sustainable cooperation in linked social dilemmas perhaps due to a cost-benefit calculus we call “leverage.”

The effect of commitment in the public goods game with endogenous institution formation

AbstractThis study focuses on the endogenous formation of institutions for the provision of public goods. Institutions that impose a contribution on their members can increase social welfare. However, without powerful executive authority, not all players become institutional members, and those who choose not to join the institution do not contribute to public goods. Endogenous institution formation—for example, international treaties to prevent global warming—may be a solution. This study examines the effect of commitment on endogenous institution formation for solving the public goods problem. We compared two rules in which participants either committed to join or did not join an institution. Under both rules, players who proposed to form an institution could withdraw from it during the formation process. Under the breakaway rule, the institution can be formed even if some proposers withdraw, whereas under the unanimity rule, the institution is never formed if at least one proposer withdraws. Thus, the unanimity rule required the commitment of proposers for institution formation. Our experimental result showed that the unanimity rule increased the contribution to public goods, whereas the breakaway rule did not. Our findings suggest that the commitment to become a member of an institution is essential for endogenous institution formation.

Economics and Morality Conflicts in the Public Goods Using

Introduction. The country’s economic prosperity depends on economic, political, and social factors. A crucial component of a successful country’s development is its culture, which accumulates moral and value guidelines for the individual’s behaviour. Strict observance of moral rules is considerable for public trust formation, which is the foundation for social development. The relevance of the study is caused by the contradictions between individual and collective interests in using public goods. Individual interest gravitates toward cost reduction and avoiding payment for public goods. Instead, the collective interest consists in the moral obligation of the individual to pay for public goods for the general and individual well-being.
 Aim and tasks. The purpose of the article is to interpret the phenomena of the economic, social, and cultural factors of the free-riding problem of public goods.
 Results. An attribute of public goods is their nonrivalrous nature (the use of the good does not reduce the amount of the good available to others) and non-excludable (non-payers can use the good on an equal basis with those who honestly paid). The free-ride problem of public goods cannot be reduced to market regulation, whereas all communities benefit from the resources, regardless of whether they have paid for them (taxes, transport fees) or not. Regression analysis shows no relationship between economic and moral factors, in particular, the ability to pay for a good (using public transport) does not reduce the number of people who want to get it free of charge (free ride). The cost of the service (the ticket price) also does not affect the willingness to pay or not to pay for public goods usage. Thus, it can be recognized that the economic factor is not critical in using public goods.
 Conclusions. Simultaneously, the social factor of compliance with rules and trust is principal. The awareness that other participants also pay for public goods gives moral satisfaction to the individual and positively reinforces his conscience. Individuals’ consciousness and self-limitation form a cohesive community capable of development. Consequently, the social factor influences the individual's motivation and attitude toward the community's interests. Therefore, it can be assumed that the country’s economic growth depends on cultural and social norms regarding compliance with rules and trust, in addition to other factors.

Should a benevolent government provide public goods if it cannot commit?

AbstractI compare two different systems of provision of binary public goods: a centralized system, operated by a benevolent government that has limited commitment power; and a decentralized system, based on voluntary contributions, where agents can communicate but cannot write contracts. I show that any ex‐post individually rational allocation that is implementable by the centralized system is also implementable by the decentralized system. This suggests that when the public good provision problem is merely an informational one, as is the case with binary public goods, a decentralized system may perform better.

Political ideology and moral dilemmas in public good provision

Individuals often face dilemmas in which non-cooperation serves their self-interest and cooperation favors society at large. Cooperation is often considered the moral choice because it creates equality and fairness among citizens. Accordingly, individuals whose political ideology attaches greater value to equality than to agency and self-reliance should not only cooperate on more rather than less efficient public goods, but also more on public goods from which individuals benefit equally rather than unequally. We examine this possibility by comparing ideologically left-leaning and right-leaning individuals’ cooperation on multiple public goods that varied in efficiency and (in)equality in returns. We find that left-leaning individuals cooperate more than right-leaning ones, but only on public goods that benefit everyone equally, and not more on public goods that generate inequalities. Left-leaning individuals also trust and expect others to cooperate more on equal- versus unequal-returns public goods, while self-identified right-leaning individuals do not differentiate between these. Interestingly, ideology does not predict which public good is deemed more morally appropriate to cooperate on. Results combined specify when and why self-identified leftists can(not) be expected to cooperate more than rightists and reveal how moral decision-making depends on structural elements of the public good provision problems that citizens face.

Economic foundations of generalized games with shared constraint: Do binding agreements lead to less Nash equilibria?

A generalized game is a situation in which interaction between agents occurs not only through their objective function but also through their strategy sets; the strategy set of each agent depends upon the decision of the other agents and is called the individual constraint. As opposed to generalized games with exogenous shared constraint literature pioneered by Rosen (1965), we take the individual constraints as the basic premises and derive the shared constraint generated from the individual ones, a set K. For a profile of strategies to be a Nash equilibrium of the game with individual constraints, it must lie in K. But if, given what the others do, each agent agrees to restrict her choice in K, something that we call an endogenous shared constraint, this mutual restraint may generate new Nash equilibria. We show that the set of Nash equilibria in endogenous shared constraint contains the set of Nash equilibria in individual constraints. In particular, when there is no Nash equilibrium in individual constraints, there may still exist a Nash equilibrium in endogenous shared constraint. We also prove a few results for a specific class of generalized games that we call non-classical games. Finally, we give two economic applications of our results to collective action problems: carbon emission and public good problems.

Human cooperation in changing groups in a large-scale public goods game

How people cooperate to provide public goods is an important scientific question and relates to many societal problems. Previous research studied how people cooperate in stable groups in repeated or one-time-only encounters. However, most real-world public good problems occur in groups with a gradually changing composition due to old members leaving and new members arriving. How group changes are related to cooperation in public good provision is not well understood. To address this issue, we analyze a dataset from an online public goods game comprising approximately 1.5 million contribution decisions made by about 135 thousand players in about 11.3 thousand groups with about 234 thousand changes in group composition. We find that changes in group composition negatively relate to cooperation. Our results suggest that this is related to individuals contributing less in the role of newcomers than in the role of incumbents. During the process of moving from newcomer status to incumbent status, individuals cooperate more and more in line with incumbents.

Preferences and perceptions in Provision and Maintenance public goods

We study two generic versions of public goods problems: in Provision problems, the public good does not exist initially and needs to be provided; in Maintenance problems, the public good already exists and needs to be maintained. In four lab and online experiments (n=2,105), we document a robust asymmetry in preferences and perceptions in two incentive-equivalent versions of these public good problems. We find fewer conditional cooperators and more free riders in Maintenance than Provision, a difference that is replicable, stable, and reflected in perceptions of kindness. Incentivized control questions administered before gameplay reveal dilemma-specific misperceptions but controlling for them neither eliminates game-dependent conditional cooperation, nor differences in perceived kindness of others' cooperation. Thus, even when sharing the same game form, Maintenance and Provision are different social dilemmas that require separate behavioral analyses.

Bilateral Trade with Multiunit Demand and Supply

We study a bilateral trade problem with multiunit demand and supply and one-dimensional private information. Each agent geometrically discounts additional units by a constant factor. We show that when goods are complements, the incentive problem—measured as the ratio of second-best to first-best social surplus—becomes less severe as the degree of complementarity increases. In contrast, if goods are substitutes and each agent’s distribution exhibits linear virtual types, then this ratio is a constant. If the bilateral trade setup arises from prior vertical integration between a buyer and a supplier, with the vertically integrated firm being a buyer facing an independent supplier, then the ratio of second-best to first-best social surplus is, in general, not monotone in the degree of complementarity when products are substitutes and is increasing when products are complements. Extensions to profit maximization by a market maker and a discrete public good problem show that the broad insight that complementarity of goods mitigates the incentive problem generalizes to these settings. This paper was accepted by Joshua Gans, business strategy. Funding: Financial support from the Samuel and June Hordern Endowment, the University of Melbourne Faculty of Business & Economics [Eminent Research Scholar Grant], and the Australian Research Council [Grant DP200103574] is acknowledged.

Neutral public good mechanisms.

In this paper, I justify neutral mechanisms as the reasonable solutions for public good provision and cost shares in public goods problems. I illustrate that neutral mechanisms can be easily computed by the tractable set of conditions with straightforward interpretations for a class of public goods problems. I show that, unlike neutral mechanisms, ex ante incentive efficient mechanisms are not robust to a perturbation of the information structure at the time of mechanism selection. I highlight several merits of using neutral mechanisms instead of interim incentive efficient mechanisms: Neutral mechanisms yield sharp predictions, are invulnerable to the possibility of information leakage during the selection process, and have the attractive properties of both efficiency and equity. I discuss implications for the analysis of ex ante and interim incentive efficient mechanisms for public goods problems.

FEATURES OF ADAPTIVE MANAGEMENT OF SOCIAL CONFLICTS IN PUBLIC POWER

The article examines the features of adaptive management of social conflicts in public power. Conflicts are unavoidable and can be constructive or destructive. Thus, conflict management is a major part of practice, and especially managers and managers spend a lot of time preventing and intervening in conflicts of all kinds. The method of conflict management reflects key elements of organizational culture or socially general norms and is called the culture of organizational conflict in public power Social conflict can be understood by using the following synonyms: clash, tension, crisis, struggle, or friction. Although these words themselves are inadequate, in providing an acceptable definition, they are a repeating decimal part of a typical conflict. It is important to note that active conflict detection as a means of obtaining information requires a reasonable approach, as this can provoke an undesirable escalation of the conflict. Therefore, it is necessary to implement appropriate comprehensive procedures for mitigating the consequences of social conflicts. Conflict management should be adapted to specific conditions. Conclusion dilemmas inherent in the process of assessing the impact and participation of the public, such as the paradox of public participation and the problem of public goods, require new approaches to conflict management. Proactive conflict management, which includes early information about stakeholder attitudes as a potential limitation and early consideration of long-term benefits depending on the type of interaction, can be useful. Moreover, it may be useful to change views on the properties of social conflicts: an interested attitude to conflict situations, considering them as a valuable source of information, can create opportunities for new solutions to complex problems in public power.

Tradable immigration quotas revisited

This paper revisits the theory behind tradable immigration quotas, which have been proposed to raise South-North migration and, specifically, refugee resettlement. We qualify previous research by showing that tradable immigration quotas are generally not utilitarian efficient for host countries. The reason is that global migration entails more complex externalities than other public-good problems, such as environmental protection, where market-based instruments are common. The inefficiency is exacerbated when migrants are matched to countries. Despite these caveats, we offer new results in favor of tradable immigration quotas plus matching.