Voting for burden sharing rules in public goods games


Gallier, Carlo ; Kesternich, Martin ; Sturm, Bodo


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URL: https://ub-madoc.bib.uni-mannheim.de/37069
URN: urn:nbn:de:bsz:180-madoc-370697
Document Type: Working paper
Year of publication: 2014
The title of a journal, publication series: ZEW Discussion Papers
Volume: 14-056
Place of publication: Mannheim
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: C72 , C92 , H41,
Keywords (English): Public goods , endogenous institutions , minimum contribution rules , cooperation
Abstract: In this experiment, we endogenize the choice of which contribution scheme is implemented in a public goods game. We investigate three rule-based contribution schemes. In a first step, players agree on a common group provision level using the principle of the smallest common denominator. Subsequently, this group investment is allocated according to a specific rule to individual minimum contributions. The game is implemented either as a Single- or a Multi-Phase Game. In the Single-Phase Game, the contribution schemes are exogenously implemented. In the Multi-Phase Game, we let subjects vote on the rule-based contribution schemes. If a scheme obtains a sufficient majority it is implemented. In case no sufficient majority is reached, subjects have to make their contributions to the public good using the voluntary contribution mechanism (VCM). Our results suggest that the endogenous choice of a contribution scheme has an impact on the level of contributions. In case of a rule-based contribution scheme which equalizes payoffs, contributions are higher if subjects choose the scheme than in case the scheme is implemented exogenously. In contrast, contributions are higher if the VCM is implemented exogenously than in case a sufficient majority cannot be obtained and, therefore, subjects have to play the VCM.

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Gallier, Carlo ; Kesternich, Martin ; Sturm, Bodo (2014) Voting for burden sharing rules in public goods games. Open Access ZEW Discussion Papers Mannheim 14-056 [Working paper]
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