Voluntary Contributions by Consent or Dissent

Tan, Jonathan H.W. and Breitmoser, Yves and Bolle, Friedel (2010): Voluntary Contributions by Consent or Dissent.

Abstract

We study games where voluntary contributions can be adjusted until a steady state is found. In consent games contributions start at zero and can be increased by consent, and in dissent games contributions start high and can be decreased by dissent. Equilibrium analysis predicts free riding in consent games but, in contrast, as much as socially efficient outcomes in dissent games. In our experiment, inexperienced subjects contribute high in consent games and low in dissent games, but behavior converges toward equilibrium predictions over time and eventually experienced subjects contribute as predicted: low in consent games and high in dissent games. Observed deviations from equilibrium in consent games are best explained by level-k reasoning, and those in dissent games are best explained by hierarchical reasoning formalized as nested logit equilibrium.

• Item Type: MPRA Paper
• Language: English
• Keywords: public good, contribution game, bounded rationality, mechanism
• Subjects: C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C71 - Cooperative Games; C - Mathematical and Quantitative Methods > C4 - Econometric and Statistical Methods: Special Topics > C44 - Operations Research ; Statistical Decision Theory; H - Public Economics > H4 - Publicly Provided Goods > H41 - Public Goods

References

Admati, A. and Perry, M. (1991). Joint projects without commitment. Review of Economic Studies, 58(2):259–276.

Amemiya, T. (1978). On a two-step estimation of a multivariate logit model. Journal of Econometrics, 8(1):13–21.

Anderson, S. and De Palma, A. (1992). Multiproduct firms: A nested logit approach. The Journal of Industrial Economics, 40(3):261–276.

Arcidiacono, P. and Jones, J. (2003). Finite mixture distributions, sequential likelihood and the em algorithm. Econometrica, 71(3):933–946.

Bolle, F. (1986). On the oligopolistic extraction of non-renewable common-pool resources. Economica, 53(212):519–527.

Budig, M., Butler, G., and Murphy, L. (1992). Pledges to nonprofit organizations: Are they enforceable and must they be enforced? University of San Francisco Law Review, 22:47–147.

Camerer, C., Ho, T., and Chong, J. (2004). A cognitive hierarchy model of games. Quarterly Journal of Economics, 119(3):861–898.

Charness, G. and Rabin, M. (2002). Understanding social preferences with simple tests. Quarterly Journal of Economics, 117(3):817–869.

Choi, S., Gale, D., and Kariv, S. (2008). Sequential equilibrium in monotone games: A theory-based analysis of experimental data. Journal of Economic Theory, 143(1):302–330.

Compte, O. and Jehiel, P. (2003). Voluntary contributions to a joint project with asymmetric agents. Journal of Economic Theory, 112(2):334–342.

Compte, O. and Jehiel, P. (2004). Gradualism in bargaining and contribution games. Review of Economic Studies, 71(4):975–1000.

Daly, A. and Zachary, S. (1978). Improved multiple choice models. In Hensher, D. and Dalvi, M., editors, Determinants of Travel Choice, pages 335–357. Saxon House, Sussex.

Dawes, R. (1989). Statistical criteria for establishing a truly false consensus effect. Journal of Experimental Social Psychology, 25(1):1–17.

Duffy, J., Ochs, J., and Vesterlund, L. (2007). Giving little by little: Dynamic voluntary contribution games. Journal of Public Economics, 91(9):1708–1730.

Dufwenberg, M., Gächter, S., and Hennig-Schmidt, H. (2006). The framing of games and the psychology of strategic play. CeDEx Discussion Paper Series.

Farewell, V. (1982). A note on regression analysis of ordinal data with variability of classification. Biometrika, 69(3):533–538.

Farrell, J. and Maskin, E. (1989). Renegotiation in repeated games. Games and Economic Behavior, 1(4):327–360.

Fehr, E. and Schmidt, K. (1999). A theory of fairness, competition, and cooperation. Quarterly Journal of Economics, 114(3):817–868.

Fershtman, C. and Nitzan, S. (1991). Dynamic voluntary provision of public goods. European Economic Review, 35(5):1057–1067.

Fischbacher, U. (2007). z-tree: Zurich toolbox for ready-made economic experiments. Experimental Economics, 10(2):171–178.

Gale, D. (2001). Monotone games with positive spillovers. Games and Economic Behavior, 37(2):295–320.

Güth,W., Levati, M., Sutter, M., and van der Heijden, E. (2007). Leading by example with and without exclusion power in voluntary contribution experiments. Journal of Public Economics, 91(5-6):1023–1042.

Hamilton, S. and Zilberman, D. (2006). Green markets, eco-certification, and equilibrium fraud. Journal of Environmental Economics and Management, 52(3):627–644.

Kübler, D. and Weizsäcker, G. (2004). Limited depth of reasoning and failure of cascade formation in the laboratory. Review of Economic Studies, 71(2):425–441.

Lee, B. (1999). Calling patterns and usage of residential toll service under self selecting tariffs. Journal of Regulatory economics, 16(1):45–82.

Levine, D. (1998). Modeling altruism and spitefulness in experiments. Review of Economic Dynamics, 1(3):593–622. Lockwood, B. and Thomas, J. (2002). Gradualism and irreversibility. Review of Economic Studies, 69(2):339–56.

Loftin, L. (1999). Protecting the charitable investor: A rational for donor enforcement of restricted gifts. B.U. Public Law Journal, 8:361–585.

Marx, L. and Matthews, S. (2000). Dynamic voluntary contribution to a public project. Review of Economic Studies, 67(2):327–358.

Matesanz, R. (1998). Cadaveric organ donation: comparison of legislation in various countries of Europe. Nephrology Dialysis Transplantation, 13(7):1632–35.

McCullagh, P. (1980). Regression models for ordinal data. Journal of the Royal Statistical Society. Series B (Methodological), 42(2):109–142.

McFadden, D. (1978). Modelling the choice of residential location. In Karlqvist, A., Lundqvist, L., Snickars, F., and Weibull, J., editors, Spatial interaction theory and planning models, pages 75–96. North Holland, Amsterdam.

McFadden, D. and Train, K. (2000). Mixed MNL models for discrete response. Journal of Applied Econometrics, 15(5):447–470.

McKelvey, R. and Palfrey, T. (1995). Quantal response equilibria for normal form games. Games and Economic Behavior, 10(1):6–38.

McKelvey, R. and Palfrey, T. (1998). Quantal response equilibria for extensive form games. Experimental Economics, 1(1):9–41.

OTF (2008). Organs for Transplants: A Report from the Organ Donation Taskforce. Department of Health, UK.

Potters, J., Sefton, M., and Vesterlund, L. (2007). Leading-by-example and signaling in voluntary contribution games: An experimental study. Economic Theory, 33(1):169–182.

Rogers, B., Palfrey, T., and Camerer, C. (2009). Heterogeneous quantal response equilibrium and cognitive hierarchies. Journal of Economic Theory, 144(4):1440–1467.

Romano, R. and Yildirim, H. (2005). On the endogeneity of Cournot-Nash and Stackelberg equilibria: Games of accumulation. Journal of Economic Theory, 120(1):73–107.

Ross, L., Greene, D., and House, P. (1977). The false consensus effect: An egocentric bias in social perception and attribution processes. Journal of Experimental Social Psychology, 13(3):279–301.

Schelling, T. (1960). The strategy of conflict. Harvard University Press Cambridge, Massachusetts.

Schwarz, G. (1978). Estimating the dimension of a model. Annals of Statistics, 6(2):461–464.

Shaw, W. and Ozog, M. (1999). Modeling overnight recreation trip choice: Application of a repeated nested multinomial logit model. Environmental and Resource Economics, 13(4):397–414.

Stahl, D. and Wilson, P. (1994). Experimental evidence on players’ models of other players. Journal of Economic Behavior and Organization, 25(3):309–327.

Stahl, D. and Wilson, P. (1995). On players’ models of other players: Theory and experimental evidence. Games and Economic Behavior, 10(1):218–254.

Train, K., McFadden, D., and Ben-Akiva, M. (1987). The demand for local telephone service: A fully discrete model of residential calling patterns and service choices. The Rand Journal of Economics, 18(1):109–123.

Weizsäcker, G. (2003). Ignoring the rationality of others: Evidence from experimental normal-form games. Games and Economic Behavior, 44(1):145–171.

Whitten, G. and Palmer, H. (1996). Heightening comparativists’ concern for model choice: Voting behavior in Great Britain and the Netherlands. American Journal of Political Science, 40(1):231–260.