One Step at a Time: Do threshold patterns matter in public good provision?

Ye, Maoliang and Nikolov, Plamen and Casaburi, Lorenzo and Asher, Sam (2008): One Step at a Time: Do threshold patterns matter in public good provision?

Abstract

There is a substantial literature examining coordination in public goods games. We conducted an experiment to explore how varying patterns of thresholds affect the willingness of subjects to contribute to a public good. We had subjects play a multi-period game where each subject was allocated an initial point endowment, told a threshold for the group and had to choose how much to contribute to the common pot. Each period is identical, except for the possibility of having a different threshold, which is always stated before the players make their contributions. We found that while contributions are similar for the increasing and decreasing threshold group types when thresholds were low, a sizeable gap opens up around the average threshold size. We found that for nearly every threshold, it is more profitable to be in an increasing than in a decreasing threshold group type. Early cooperation seems to facilitate the achievement of harder-to-reach thresholds, which require considerable contributions from all members of the group. These findings are also very robust in the regression specifications. Our findings shed light on the role of past cooperative success and threshold patterns on subsequent willingness to cooperate.

• Item Type: MPRA Paper
• Language: English
• Keywords: Experimental economics; Public goods decision making
• Subjects: G - Financial Economics > G1 - General Financial Markets > G14 - Information and Market Efficiency ; Event Studies ; Insider Trading; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D81 - Criteria for Decision-Making under Risk and Uncertainty; C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C92 - Laboratory, Group Behavior; H - Public Economics > H4 - Publicly Provided Goods > H41 - Public Goods; C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C91 - Laboratory, Individual Behavior

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