Voluntary Contribution Mechanism Research Articles

On the effectiveness of leading by example in public goods games

Despite the growing interest in leadership in the experimental literature, theoretical analyses of leadership have received relatively limited attention. This study investigates the effectiveness of leading by example in public goods games among reciprocal agents. The “leading-by-example” game (LBE) is a two-stage game with the same payoff structure as the classic voluntary contribution mechanism (VCM), in which a leader first makes a contribution decision, followed by the followers who make a contribution decision upon observing the leader’s move. If the marginal per capita return (MPCR) is sufficiently high, LBE is more effective than VCM at inducing contributions. However, if MPCR is low, VCM is more effective than LBE. An experimental test of the comparative statics is conducted.

Assumed similarity in personality traits has a short-lived positive effect on cooperation in absence of reciprocity

ABSTRACT Social dilemmas employing finitely repeated public goods games are usually employed to study individual cooperation and free-riding. It remains unclear whether and to what extent cooperation in teams is motivated by the assumed similarity of personality traits of other players. This study aims to investigate the effectiveness of sharing information on personality traits in a voluntary contribution mechanism game environment, which includes a punishment mechanism, on individual contributions to a public good. These factors are integrated into a game setting that incorporates various group sizes embedded in a survey. In addition, the participants in this study were selected from the general population of the United Arab Emirates. Results show that, on average, respondents were positively affected by the similar personality traits treatment in the first round soon after the treatment.

Heterogeneous productivity stabilizes public good contributions under certainty, uncertainty and ambiguity

Typically, a linear public goods game with a voluntary contribution mechanism (VCM) sees declining contributions over repeated one-shot periods of play. However, contributions under uncertainty or ambiguity over heterogeneous productivity on individual contributions have yet to be investigated. We compare contributions under homogenous productivity of 0.6; and certain, uncertain (for future periods only and all periods) or ambiguous heterogeneity in productivity, which can be either a high (0.9) or a low (0.3) type. Certain heterogeneity unexpectedly stabilizes contributions over homogenous, led by high productivity types. Uncertain or ambiguous heterogeneity in productivity weakly lowers contributions, but they remain stable. Thus, in a novel finding that is replicated across our treatments, heterogeneous productivity appears to support stable contributions over time, even when productivity is unknown at time of contribution. This finding suggests uncertain and heterogeneous productivity are an important characteristic of public goods that needs to be considered when modelling them in the field, and reinforces the role of productivity itself in driving voluntary public good contributions.

Reciprocity or Community? Different Cultural Pathways to Cooperation and Welfare

We compare efficiency-enhancing cooperation and its underlying motives in Iceland and the US. The two countries are distinct along all measures of national culture known to us. They are however both developed democracies with similar GDP/capita (PPP adjusted). These similarities make it possible to hold constant aspects of culture related to wealth and institutions. In an experimental Voluntary Contribution Mechanism (VCM), we prime the participants with different social foci, emphasizing either their directly cooperating team or their wider social unit. With a team focus, cooperation levels do not differ between the two cultures, but this superficial similarity masks deep-seated differences: When the focus is on the wider social unit cooperation increases in Iceland and declines in the US. Both when the contribution levels are the same and when they differ, members of the two cultures differ in their motives to cooperate: Icelanders tend to cooperate unconditionally, and US subjects conditionally with a strong emphasis on reciprocity. Our findings indicate that different cultures can achieve similar economic and societal performance through different cultural norms and suggest that cooperation should be encouraged through culturally tailored persuasion tactics.

Wealth and risk heterogeneity effects in community‐based wildlife management: Experimental evidence

Community-based conservation is a widely adopted wildlife governance approach, but questions remain about the conditions under which this form of wildlife governance achieves success. Particularly, participating communities are often marked by considerable wealth and risk heterogeneities that are driven by differences in livestock or agricultural holdings and varying exposure to wildlife depredation of those holdings. The effect of these types of heterogeneity on successful conservation collective action is understudied, particularly in the case of risk heterogeneity. This lacuna limits policymakers' ability to effectively match the design of community-based programs to their particular settings. Using established behavioural experimental techniques, we model the incentive structures underlying community-based wildlife conservation where actors differ in wealth and exposure to human–wildlife conflict. We conduct a modified binary linear voluntary contribution mechanism game, in which we vary subject endowments and risk of incurring a loss when participating in collective action and we find that the type of heterogeneity matters to collective action success. On their own, the presence of either economic or risk heterogeneities (but not both) dampen cooperation compared with homogeneous groups, as do ‘balanced’ distributions of both heterogeneities (where individuals facing high risk levels receive high endowments and vice versa). However, groups with ‘unbalanced’ heterogeneities (where those facing high risk levels receive low endowments and vice versa) demonstrate cooperation at similar levels to that of homogeneous groups. At the individual level, risk drives cooperative behaviour, although its impact is influenced by relative wealth levels when both forms of heterogeneity are present. These findings suggest the need for a more in-depth look at the role and interaction of risk and wealth heterogeneities in conservation management. Read the free Plain Language Summary for this article on the Journal blog.

Comparison of the voluntary contribution and Pareto-efficient mechanisms under voluntary participation

Comparison of the voluntary contribution and Pareto-efficient mechanisms under voluntary participation

Using Milestones as a Source of Feedback in Teamwork: Insights from a Dynamic Voluntary Contribution Mechanism

Using Milestones as a Source of Feedback in Teamwork: Insights from a Dynamic Voluntary Contribution Mechanism

CO2 Emission reduction – Real public good provision by large groups in the laboratory

Public good experiments are usually conducted in the laboratory using the voluntary contribution mechanism (VCM). We use a real public good (CO2 emission rights) with comparatively large groups (up to 60 subjects) and compare the results with corresponding experiments based on the VCM. Our treatment variations include group size and the feedback that subjects receive after each round. Our data reveal that, in contrast to the VCM, subjects dealing with a real public good relate their decisions to those of their group members in the lab only in the first rounds and do not change their contributions thereafter. These observations suggest that, when faced with a real public good, subjects use the whole group, including “players” outside the lab, as a main reference point. In this way, contributions made to the real public good in the lab tend to depend on the salience of mutual cooperation benefits existing outside the lab. Our findings help to understand the transferability of previous laboratory research on the VCM to real public good provision.

The conditional contribution mechanism for repeated public goods – The general case

We present a new and simple mechanism for repeated public good environments. In the Conditional Contribution Mechanism (CCM), agents send two messages of the form, “I am willing to contribute x units to the public good if in total y units are contributed.” This mechanism offers agents risk-free strategies, which we call unexploitable. Our main theorem states that all outcomes of the CCM will eventually be Pareto efficient if agents choose unexploitable better responses. We conduct a laboratory experiment to investigate whether observed behavior is consistent with this prediction. In the complete information case we find that indeed almost 80% of outcomes are Pareto optimal. Furthermore, in comparison to the Voluntary Contribution Mechanism, the CCM leads to significantly higher contribution rates. Even under incomplete information, contributions are fairly high and do not deteriorate over time, although surprisingly the VCM does equally well in this case. Theoretically, allowing agents to send two messages helps them ensure the status-quo and at the same time offer higher contribution levels. In a further treatment, where we allow agents to send only one message, we find that total contributions are consistently lower than the CCM in early periods but are similar in later periods.

An examination of the effect of inequality on lotteries for funding public goods

AbstractWe experimentally study the impact of inequality on the effectiveness of contests for funding public goods in a development context. We observe that the typical result of a lottery funding mechanism leading to greater funding for the public good than predicted by theory extends to groups with inequality. However, while theory suggests that increased inequality should lower total contributions to a lottery funded public good, we observe the opposite pattern. This result differs from prior results for the standard voluntary contribution mechanism where increased inequality has been found to reduce public good provision. Moreover, we find that the poor do not contribute a greater share of their endowment to the public good than do the wealthy. Thus, overall our study demonstrates the potential for community development projects, when funded with a lottery mechanism, to be highly successful even in the presence of inequality and may facilitate a progressive redistribution of wealth.

Are People Willing to Voluntarily Contribute to Public Goods? The Results from the Behavioral Game Experiment.

Abstract In the paper, we discuss the possibilities of alternative provision of public goods using the individual voluntary contributions. We use the data from the behavioral public goods game based on the model of voluntary contribution mechanism. We examine how people’s decisions about voluntary contributions to public goods change when the environment changes. The participants of the game were divided into small (5 persons) and large (10 persons) groups. During the game participants were asked to invest experimental money to different types of accounts, i.e. private account, Group account 1 and Group account 2. Using the game, we also examine the impact of a provision point on voluntary contributions. Based on the analysis of the data from this behavioral game, we found that the provision point is effective only if the participants are members of a small group. When the participants were members of both a small group and of a large group the provision point was not effective. When the income of participants was considered, we found that participants with higher experimental income were less willing to voluntarily contribute to financing of a public good.

The pivotal mechanism versus the voluntary contribution mechanism: an experimental comparison

We conduct an experimental comparison of two well-known mechanisms for undertaking a binary public project: the pivotal mechanism and the voluntary contribution mechanism. We compare the two mechanisms under complete information in which each subject knows the other subjects’ payoffs. We then observe that the voluntary contribution mechanism works better than the pivotal mechanism from the perspectives of Pareto efficiency, individual rationality, and surplus maximization. On the other hand, there is no significant difference between the two mechanisms in terms of decision efficiency. These results suggest that the voluntary contribution mechanism is more favorable than the pivotal mechanism in practical applications.

Основи на съвременната икономика: Мансър Олсън и колективното действие

Mancur Olson (1932-1998) became famous with one great idea: the failure of collective action. Since interest groups provide their members with public (collective) goods with corresponding externalities, he assumed that free riding as a rational individual strategy would be a ubiquitous problem hampering the realization of efficient collective action in the provision of such goods. This remarkable idea – the application of methodological individualism and the assumption of rational individual behavior in the analysis of interest groups, provided a fertile ground for theory building in all social sciences, most notably in political science. In the field of economics, Olson’s ideas contributed to the establishment of the Public Choice Theory and became a prerequisite for fundamental research in experimental economics – on public goods, voluntary contribution mechanisms and games such as the prisoner dilemma. The present paper briefly discusses his two best-known books.

The effect of sleep on public good contributions and punishment: Experimental evidence.

We investigate the effect of a full week of sleep restriction (SR) vs. well-restedness (WR) on contributions in a common public good experiment, the voluntary contributions mechanism (VCM). We examine the effect of sleep manipulation on decisions regarding both contributions and punishment of non-contributors. Actigraphy devices are used to confirm that our random assignment to sleep condition generates significant differences in objective nightly sleep duration and sleepiness. We find that when punishment is unavailable public good contributions do not differ by SR/WR assignment. When punishment is available, we find evidence that SR subjects contribute more than WR subjects, respond more to the availability of punishment than do WR subjects, and that the availability of punishment significantly increases the contributions of SR but not WR subjects. Yet SR subjects do not punish others more or less than WR subjects. Our main findings are robust when considering compliance and sample selection. However, some findings are not robust to an alternative but less objective sleep control measure that is based partly on participants' self-identified optimal sleep levels.

Cost-effective giving with multiple public goods

In this paper, we investigate how the choice environment affects contribution behavior in settings with multiple public goods. Specifically, we design a novel experiment that uses a standard voluntary contribution mechanism (VCM) game, except that subjects face multiple simultaneous VCMs, each with a different marginal per capita return (MPCR). We study two treatments—one with constrained contribution choices and one with a richer set of options—finding that the constrained choice environment yields higher payoffs. As a virtue of our design, we are able to decompose these payoff differences into two separate channels: differences in contribution levels versus differences in the cost-effectiveness of contributions. Although the first channel is typically the primary focus of public good analyses, we offer unique insights by showing that cost-effectiveness also plays an important role in shaping welfare outcomes in settings with multiple public goods. We find that cost-ineffective contributions significantly diminish payoffs in the richer choice environment—a result with important implications for modern charity and crowdfunding platforms, where donors are faced with an ever-growing number of charitable causes to consider.

Payment and provision consequentiality in voluntary contribution mechanism: separate or joint effects?

We conducted a field stated preferences survey to understand the influence of payment and provision consequentiality script on valuation associated with voluntary contribution. Based on four treatment groups with single or combined consequentiality scripts and a contingent-ranking willingness to pay question, this paper provided some evidence that at least for some attributes, a respondent facing positive provision probability reported a significantly higher preference for the opt-in projects if and only if the payment consequentiality was co-presented. For the payment consequentiality, its impact on valuation was independent of the presence of provision consequentiality. We also discussed the limits of our study and provided suggestions for future research in this line.

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.

Partial Versus General Compulsory Solidarity: an Experimental Analysis

We focus on ways and means of solidarity and their more or less voluntary and involuntary character. Alternative ways of redistribution are modeled by combining redistribution as emergent from a non-discriminatory voluntary contribution mechanism, VCM, with an outside option for a “super-rich”, R, participant to donate to VCM participants. The outsider may discriminate between participants of the VCM on the basis of information accessible at a cost to her. Inclusion in and exclusion from the VCM are involuntary while contributions in it are voluntary. How involuntary inclusion of R in VCM affects her discriminatory voluntary donations and contribution behavior is explored experimentally.

No todo lo que brilla es oro: acción colectiva en minería aurífera. El caso de Buriticá, Antioquia

Los territorios colombianos donde existe explotación minera han sido objeto numerosos estudios desde el punto de vista económico, político y social. En este artículo se analiza la acción colectiva en Buriticá, Antioquia, para entender sus dinámicas comunitarias a pesar de los retos de la explotación minera. Examina la cooperación a partir del mecanismo de contribución voluntaria y estima sus determinantes mediante un modelo probit. Los resultados indican que, aun en la adversidad, las personas tienden a actuar en forma cooperativa, a diferencia de estudios anteriores que se enfocan en la maximización del benefício individual.

The Doubly-Bounded Rationality of an Artificial Agent and its Ability to Represent the Bounded Rationality of a Human Decision-Maker in Policy-Relevant Situations

ABSTRACT This article introduces two tools aimed at improving our understanding of the relationship between human and artificial rationality and helping us identify agents that are false positives or negatives. The first is a framework that systematically exposes where and how discrepancies between human and artificial rationalities can arise. The second is a test that utilises the insight gained from applying the framework in testing the ability of an artificial agent to represent human decision-making. To demonstrate the usefulness of the test, the article describes its application in testing the ability of a set of Individual Evolutionary Learning agents to represent human decision-making in a social psychology experiment, called the Voluntary Contributions Mechanism. In contrast to the results of a prior test that relied on a behaviour-based method, the results of this test show that the ability of these artificial agents to replicate the behaviour of their human counterparts is not a reliable indicator of their ability to represent their decision-making. The article then uses insight from the test to suggest how to improve the ability of Individual Evolutionary Learning agents to represent human decision-making in the Voluntary Contributions Mechanism.