Voluntary Contribution Mechanism Research Articles

Intra-household cooperation and inter-generational communication in the extended family: a field experiment in a poor urban community in Africa

There is a dearth of studies on cooperation within the extended inter-generational family, a common living arrangement in Africa. This study employs a communication treatment and a 10-item Family Communication Scale (FCS) of the Family Adaptability and Cohesion Evaluation Scales (FACES IV) to explain cooperation in a Voluntary Contribution Mechanism (VCM) beyond the laboratory. The study applies the Random Effect regression analysis. The results show that inter-generational cooperation is heterogeneous, limited and subject to decay, with stronger cooperation up the generational hierarchy. The framed field experiment presents evidence of the positive impact on cooperation of face-to-face communication and of positive perceptions of family communication. More specifically, communication mitigates contribution decay and enhances cooperation, especially between parents and grandparents and their children and grandchildren. Inter-generational transfers and the associated investment in family-type public goods can be augmented by social developmental policies such as parenting skills training that enhance family communication and in turn, intra-household cooperation.

Community Participation with Trust: Evidence from a Framed Lab-in-field Experiment with Hybrid Game Model

Out of the 104 islands of Indian Sundarbans, 54 are inhabited. These islands have mud embankments which protect them from intrusion of river and sea water and have made human settlement possible in these islands. Once the embankments were protected from tidal and storm surges by a layer of mangrove forests. But now the mangrove cover has vanished and consequently the embankments are frequently eroded or develop breaches being directly exposed to tidal and storm surges. One way to protect these mud embankments is to recreate mangrove plantations along the toe-line on the outer side of the embankments. This article uses a framed lab-in-field experiment to measure inclination towards community participation in regenerating common pool resources (CPRs), specifically regeneration of mangrove forest on the outer side of the embankments. The 320 subjects who participated in the experiment were villagers from different islands in the Indian Sundarbans. The experiment is a hybrid of the simple Public Goods Game with Voluntary Contributions Mechanism (VCM) and the Trust Game. The first is used to measure inclination towards contributing resources and effort for generation of CPRs and the second is to see if the participants trust others not to extract from the regenerated CPR and if such trust is reciprocated. The results show that voluntary contributions, contrary to theoretical prediction of free riding, are significantly high, though less than when there is no extraction. Trust levels are also quite high and a third of such trust is reciprocated. JEL Codes: C92, H40, Q23

RANK‐ORDER COMPETITION IN THE VOLUNTARY PROVISION OF IMPURE PUBLIC GOODS

Publicly provided goods often create differential payoffs due to timely or spatial distances of group members. We design and test a provision mechanism which utilizes rank competition to mitigate free‐riding in impure public goods. In our Rank‐Order Voluntary Contribution Mechanism (Rank‐Order‐VCM) group members compete via observable contributions for a larger share of the public good; high contributors receive preferential access (a larger share), while low contributors receive restricted access (a lower share). In a laboratory experiment, Rank‐Order‐VCM elicits median contributions equal to the full endowment throughout the finitely played games with constant groups. In the control treatment, with randomly assigned ranks, the contributions are significantly lower and decline over time. We thus provide evidence of rank competition, in situations where discriminatory access to public goods is possible, being efficiency enhancing. (JELC91, H41)

Intragroup competition in public good games: The role of relative performance incentives and risk attitudes

AbstractWe analyze a public good game (PGG) with intragroup competition in which, generally but not always, the dominant strategy is to not contribute; therefore, free riding is the unique Nash equilibrium, not achieving Pareto efficiency. We propose a PGG setup where subjects' contributions are rewarded with different individual returns following a rank‐order voluntary contribution mechanism. It is found that the resulting competition for a better return significantly increases contributions. This effect is sensitive to the salience of return differences rewarding higher contributions. Furthermore, the positive effect of return differences on contribution levels depends on an individual's return‐to‐risk sensitivity as elicited through an independent risk elicitation task.

Cooperation in a risky world

AbstractWe offer a novel investigation of the effect of environmental risk on cooperation in the Voluntary Contribution Mechanism. Our baseline is the standard setting, in which the personal return from the public good is deterministic, homogeneous, and publicly known. Our experimental treatments alter this classic design by making the marginal per capita return from the public good probabilistic. In thehomogeneous risk(HomR) treatment, the random draw is made for the whole group, whereas in theheterogeneous risk(HetR) treatment, this happens independently for each group member. Our hypothesis is that different environmental risks may differently affect the ex post payoff inequalities, so that other‐regarding preferences (inequality aversion) may generate higher contributions in HomR than in HetR. Our main result is that the environmental risk does not affect the patterns of cooperation either in the one‐shot or in the finitely repeated version of the game. This suggests that the standard experimental methodology provides a robust and conservative measure of human cooperation.

Voluntary contributions of time: Time-based incentives in a linear public goods game

This paper presents the findings of an experimental study designed to investigate whether the pattern of contributions elicited in a Voluntary Contribution Mechanism (VCM) replicates the stylized facts reported in the literature when participants’ time, rather than their money, is at stake. In this experiment, participants are all confronted to the same incentive structure. For half of them, the game is materialized using monetary payoffs, as is done in standard VCM studies. For the other half, the returns from the private and public accounts are implemented as reductions in waiting time. Experimental procedures are designed to keep the decision domain, the size of incentives and the degree of confidentiality constant across the two resources. The contribution patterns elicited by both treatments are found to be (i) remarkably similar and (ii) in line with the picture typically drawn in the literature. Group contributions are statistically indistinguishable in terms of average, variability and distribution, in virtually all rounds of the game. Although I do find a significant difference in the decay rate of contributions across rounds, seemingly driven by a greater proportion of early free-riders and late full contributors in the Time Treatment, this effect is both small in magnitude and inconsequential in terms of game efficiency. Overall, the stylized facts often presented in the VCM literature seem to be robust to a change in operationalization of the incentive structure.

Free-rider Problem in Classroom Games - Impact of Gender and Intergroup Conditions

Behavioural experiments in the field of provision of public goods (including free rider problem) help to uncover the underlying processes and forces determining the nature of economy in the public sector. The objective of this paper is to determine the impact of gender and intergroup conditions on the extent of cooperation in standard linear public goods game using the voluntary contribution mechanism. Design of the teaching experiment is based on the methodology of Špalek (2011) with some modification. There were 80 undergraduate students of business participating in the classroom game, age range 20–22 years. Students were divided into three independent groups by 26 to 27 participants. Each group was playing independently, and individual strategies were recorded. We used the nonparametric tests (Mann‑Whitney U test and Kruskal‑Wallis Test) to analyse the differences between the gender and groups. Findings do not show statistically significant difference based on gender. On the other hand, the intergroup conditions determined by the social dynamics and discussion have significant influence on the distribution of goods. Results bring strong evidence on the importance of social and political factors influencing the pro‑social behaviour in the society.

Estimation of Treatment Effects in Repeated Public Goods Experiments

This paper provides a new statistical model for repeated voluntary contribution mechanism games. In a repeated public goods experiment, contributions in the first round are cross-sectionally independent simply because subjects are randomly selected. Meanwhile, contributions to a public account over rounds are serially and cross-sectionally correlated. Furthermore, the cross-sectional average of the contributions across subjects usually decreases over rounds. By considering this non-stationary initial condition—the initial contribution has a different distribution from the rest of the contributions—we model statistically the time varying patterns of the average contribution in repeated public goods experiments and then propose a simple but efficient method to test for treatment effects. The suggested method has good finite sample performance and works well in practice.

A new experimental mechanism to investigate polarized demands for public goods: the effects of censoring

Many social dilemmas involve deciding among alternative public goods, and include cases where part of the population may dislike a particular option. In such cases, an agent may want to spend resources to oppose or reduce the provision of the option they don’t like. We propose the generalized voluntary contributions mechanism (GVCM), which allows allocating resources to increase or decrease the level of public good. Our main treatment variables include two versions of the GVCM (uncensored, or censored at positive provision). We study performance of GVCM for various compositions of the polarized preferences. We find that uncensoring the mechanism does not impose net efficiency costs and leads to more diversity in the provision of the public good. The nature of efficiency loss is more complex compared to standard VCM and is not driven by free riding.

The Integrative Effects of Leading by Example and Follower Traits in Public Goods Game: A Multilevel Study.

As an important way to understand leadership based on voluntary contribution mechanisms, the importance of leading by example to teamwork is becoming more and more evident in recent years. However, existing theories based on signaling and reciprocity perspectives, respectively, provide incomplete theoretical explaining. This study adds clarity by conducting a cross-level study that indicates a possible integrative framework of both signaling and reciprocity perspective on leading by example. Results were using data gathered from 130 Chinese college students, which were allocated into one baseline group and three experimental groups. A hierarchical model was used to examine the effects of leading by example on different levels. It is found that leading by example has positive effects on the cooperation of followers on both the group level and the individual level. Risk attitudes have positive effects on the cooperation of followers while trust attitudes have negative effects. Our findings suggest that both leading by example and personal traits significantly influence cooperation but on different levels. It also reminds us that a more systematic way to understand leadership is needed.

Cooperation and Strategic Complementarity: An Experiment with Two Voluntary Contribution Mechanism Games with Interior Equilibria

In public goods game experiments, designs implementing non-linearities in the production are less common than the standard linear setting, especially so under the assumption that the private goods production and public goods aggregation function are both non-linear. We study a voluntary contribution game (VCM) in which returns from the private project have diminishing marginal benefits and the contributions to the joint project exhibit pairwise strategic complementarities. As a control, we use a public goods game with an identical private production technology, but with the standard linear public goods aggregation. In addition to the aggregation technology, we manipulate the group size variable: In both treatments, the subjects will first play a VCM game in groups of five for 20 rounds, after which the group size is reduced to two, and the game is played for another 20 rounds. A significant over-contribution is observed in both settings when the group size is five. The rate of over-contribution is much higher under the complementary technology, but as predicted by theory, the contributions drop drastically when the group size is reduced from n = 5 to n = 2 within this treatment. Our experiment also provides empirical evidence that the so-called group size effect is present in both treatments, but it is much weaker under the standard aggregation technology.

Can Non-Binding Promises Increase Cooperation in a Voluntary Contribution Mechanism Game? An Experiment

We consider a modified voluntary contributions mechanism (VCM) game where the marginal per capita return (mpcr) for a group of responders is endogenously determined by the proposer. We allow the proposer to implement a mpcr that is different to the mpcr initially announced, after observing responders’ contributions. Thus, the mpcr used to determine responders’ payoffs may differ from the mpcr that was public information when responders decided their contributions. Our findings indicate that contributions increase with the announced mpcr even when the announced mpcr is non-binding. This suggests that promising a high mpcr in VCM type interactions can be successful at increasing individuals’ contributions even if the eventual mpcr that determines payoff is substantially lower. Finally, we find that the marginal gains from the above strategy can be expected to decrease with experience.

The Binary Conditional Contribution Mechanism for public good provision in dynamic settings — Theory and experimental evidence

We present a new and simple mechanism for repeated public good environments. In the Binary Conditional Contribution Mechanism (BCCM), every agent's message has the form, “I am willing to contribute to the public good if at least k agents contribute in total.” This mechanism offers agents risk-free strategies, which we call unexploitable. We prove that if agents choose unexploitable messages in a Better Response Dynamics model, all stable outcomes of the BCCM are Pareto efficient. We conduct a laboratory experiment to investigate whether observed behavior is consistent with this prediction. Subjects play the BCCM in an environment with complete information and homogeneous valuations or in a second environment with incomplete information and heterogeneous valuations. In both cases all stable outcomes in the experiment are in line with the prediction of the dynamic model. Furthermore, comparison treatments with the Voluntary Contribution Mechanism show that the BCCM leads to significantly higher contribution rates.

Instability in the voluntary contribution mechanism with a quasi-linear payoff function: An experimental analysis

We conduct experiments to investigate the convergence of contributions in the voluntary contribution mechanism (VCM) with two quasi-linear payoff functions. One is linear with respect to private goods and nonlinear with respect to public goods; we call it “QL1.” The other is linear with respect to public goods and nonlinear with respect to private goods; we call it “QL2.” The system with QL1, built on the assumption of self-interested players and myopic Cournot best response dynamics, is not stable, but the system with QL2 has a dominant Nash equilibrium. This theoretical result predicts a “pulsing” of contributions in the VCM with QL1. Our experimental observations demonstrate that individual contributions are certainly converging to the dominant Nash equilibrium in the experiment with QL2. In the experiments with QL1, however, the dispersion of individual contributions increases progressively with repeated trials, and the contributions are still volatile in the experiments’ last periods, although we do not find a clearly unstable pulsing in the group's total contribution.

Does Uncertainty Deter Provision of Public Goods?

Nous étudions un jeu de bien public répété avec un horizon fini et connu (sous la forme du mécanisme de contribution volontaire) avec une incertitude complète sur le rendement marginal du bien public : ni le rendement marginal personnel, ni les rendements marginaux des autres joueurs ne sont connus au moment de la prise de décision sur la contribution individuelle au bien public. Nous montrons que les contributions sont similaires lorsque le rendement marginal du bien public est prédéterminé et parfaitement connu, et lorsqu’il est incertain. Dans les deux cas, les contributions ont tendance à décroître avec la répétition. En tenant compte des résultats expérimentaux précédents, nos résultats suggèrent que la coopération dans les jeux de biens publics est sensible à la source d’incertitude sur le rendement marginal du bien public.

The Bobolink Project: Selling Public Goods From Ecosystem Services Using Provision Point Mechanisms

We report a two-year field experiment that solicited residents of Jamestown, Rhode Island, USA, to fund contracts with farmers willing to provide public goods associated with improving the nesting success of grassland birds, particularly the Bobolink. This experiment explores the potential to leverage valuation research for the purpose of enhancing charitable contributions in a manner consistent with developing markets for ecosystem-service public goods; we focus on individuals' willingness to contribute revenue. The direct-mail marketing experiment collected over $16,000 through four provision point, money-back guarantee mechanisms: a voluntary contribution mechanism with a proportional rebate; a pivotal mechanism based on the Clarke tax; and two novel uniform price mechanisms, each presented in discrete choice and open-ended response formats. We find that citizens do respond strategically: consistently lower offers in the open-ended format suggest a high incidence of cheap riding, but also a significant effect of higher suggested offer thresholds. These framing effects dominated differences among mechanisms, as revenue generated from the proportional rebate and one of the uniform price mechanisms approached the potential for revenue generation estimated under the incentive compatible pivotal mechanism.

Population Uncertainty in Voluntary Contributions of Public Goods

I examine how uncertainty in the size of the relevant population affects the voluntary contribution of public goods. I analyze a case where the marginal production of public goods is decreasing and convex, and the agents' social preferences are irrelevant to the population size. In this case, when the number of players is random, the voluntary contribution level in Nash equilibrium is higher than when the number of players is fixed at the mean of the population distribution. I also show that the voluntary contribution level decreases as the expected number of players increases, but such a decreasing tendency is weaker than predicted by the model without population uncertainty. I also analyze another case where the marginal production of public goods is constant and the agents' social preferences are modeled in the form of an increasing concave warm-glow utility in the population size. In this case, the voluntary contribution level is lower under population uncertainty, and the increasing tendency of voluntary contribution level is weaker than predicted by the model without population uncertainty. The results of the lab experiments support many aspects of the theoretical predictions. The linear voluntary contributions mechanism (VCM) experiment can capture the relationships between warm glow and population uncertainty, and the nonlinear VCM experiment can examine whether the contribution level depends on reasoning. As the mean population size increased, the changes in contribution level were smaller under population uncertainty, and the subjects' decisions were determined mainly by the lower bound of the population distribution. When the population distribution was more volatile, subjects contributed more. It is a new observation that the salience of population uncertainty partly drove out warm glow.

Green Electricity Markets as Mechanisms of Public-Goods Provision: Theory and Experimental Evidence

Utility-based green electricity programs provide market opportunities for consumers to reduce the carbon footprint of their electricity use. These programs deploy three types of public-goods contribution mechanisms: voluntary contribution, green tariff, and all-or-nothing green tariff (Kotchen and Moore, 2007). We extend the theoretical understanding of the all-or-nothing green tariff mechanism by showing that an assumption of warm-glow preferences is needed to explain widespread participation in programs deploying this mechanism. We conduct the first experimental test to compare the revenue generating capacity of a pure public good (based on the voluntary contribution mechanism) and an impure public good (based on the green tariff mechanism). In experimental play, the voluntary contribution mechanism raises 50% more revenue than the green tariff mechanism. With the all-or-nothing green tariff, experimental play and regression estimates show that a warm-glow preference positively affects participation, as predicted by the theory.

Cooperation in a Risky World

We study the effect of environmental risk on cooperation in the Voluntary Contribution Mechanism. Our baseline is the standard setting in which the personal return from the public good is deterministic, homogeneous, and publicly known. Our experimental treatments alter this classic design by making the marginal per capita return from the public good probabilistic. In the homogeneous risk treatment, the random draw is made for the whole group, while in the heterogeneous risk treatment this happens independently for each group member. Our main result is that risk does not harm cooperation either in the one-shot or in the finitely repeated version of the game. This suggests that the standard experimental methodology provides a robust and conservative measure of human cooperation.

The Impact of Sleep Restriction on Contributions and Punishment: First Evidence

We implement a one-week partial sleep restriction protocol to investigate the effect of sleep deprivation on joint production in a standard voluntary contributions mechanism (VCM) experiment. Additionally, the effect of sleep restriction on an individual's likelihood of sending costly peer punishment is examined. Actigraphy sleep monitoring watches are used to validate that our random assignment to sleep restricted (SR) and well-rested (WR) conditions generates significant differences in both objective nightly sleep duration and subject sleepiness. Using multiple measures of sleep restriction, and non-parametric as well as regression analysis, we find that when punishment is not available, sleep restriction does not affect the contributions made to joint production. When punishment is available, we find weak evidence that SR subjects contribute more than WR subjects, but there is no evidence that SR and WR subjects differ in the amount they punish others. However, we also find that SR subject contributions are significantly more sensitive to the introduction of peer punishment. SR subject punishment decisions may also be more sensitive to the deviation of their contributions from other group members' contributions and more sensitive to having received punishment themselves. Our results have implications for understanding how the norm enforcement availability may differentially impact individuals depending on their current sleep state.