Giving at the close: Experimental evidence on cooperation in contributing to a public good

• DOI: http://doi.org/10.1111/jpet.12409
• Author: Yossef Tobol,Mordechai E. Schwarz,Yuval Arbel,Ronen Bar‐El
• Date: 01 December 2019
• Published date: 01 December 2019

J Public Econ Theory. 2019;21:1179–1199. wileyonlinelibrary.com/journal/jpet © 2019 Wiley Periodicals, Inc.

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1179

Received: 5 December 2016

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Accepted: 26 September 2019

DOI: 10.1111/jpet.12409

ORIGINAL ARTICLE

Giving at the close: Experimental evidence on

cooperation in contributing to a public good

Yuval Arbel

1

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Ronen Bar‐El

2

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Mordechai E. Schwarz

2

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Yossef Tobol

3,4

1

Department of Economics and

Management, Western Galilee College,

Acre, Israel

2

Department of Economics and

Management, The Open University of

Israel, Ra’anana, Israel

3

Department of Business Administration,

The Jerusalem College of Technology,

Jerusalem, Israel

4

IZA Institute of Labor Economics,

Bonn, Germany

Correspondence

Ronen Bar‐El, Department of Economics

and Management, The Open University

of Israel, Ráanana 4353701, Israel.

Email: ronenba@openu.ac.il

Funding information

The Open University of Israel, Grant/

Award Number: 867619

Abstract

We present a simple dynamic model of contributions to

a public good. We test the model by conducting a public

good game experiment and fundraising experiment

among religious Jewish students for the procurement

of sustainable supplies for their campus synagogue. The

results of the experiments show a high level of

cooperation; particularly, the results of the public good

experiment show that contributions are above the

predicted optimum. Nevertheless, in accordance with

the economic theory, we find that the contribution path

is upward sloping and contributions increase with the

benefit of the public good. Our findings also suggest that

the level of contributions and their path are affected by

peer and gender effects.

1

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INTRODUCTION

To what extent does the Nash equilibrium predict real‐life consequences? In this paper, we

address this long‐debated question (see Samuelson, 2005; Smith, 1989) in the context of the

private provision of public goods. We construct a simple dynamic model and test it using a

laboratory experiment and an experiment that replicates familiar real‐life decisions. Namely, we

attempt to overcome the problem created by artificial laboratory settings (see Levitt & List,

2007; Smith, Suchanek, & Williams, 1988). We find, in accordance with the economic theory,

that the contribution path is upward sloping and contributions increase with the benefit from

the public good. Nevertheless, the results also show a high level of cooperation and suggest that

contributions are also affected by peer and gender effects.

Most studies concerning public goods examine cooperation aspects by conducting repeated linear

public good experiments or voluntary contribution mechanisms (VCMs) in the laboratory

(see Chaudhuri, 2011; Ledyard, 1995 for an exhaustive literature review). Those papers focus on the

inconsistency between the zero contributions predicted by the Nash equilibrium and the much more

significant degree of cooperation observed in experiments. The degree of cooperation was found to be

positively correlated with factors such as group size (Isaac & Walker, 1988; Isaac, Walker, & Williams,

1994; Zelmer, 2003),

1

information about the contributions made by others (Bigoni & Suetens, 2012;

Gächter, Nosenzo, Renner, & Sefton, 2010; Shang & Croson, 2009), and the level of cohesion among

the group of contributors (Croson, 1996; Gächter & Herrmann, 2011; Rege & Telle, 2004).

On the other hand, the evidence on the effect of religiosity on cooperation is inconclusive

(Anderson & Mellor, 2009; Anderson, Mellor, & Milyo, 2010) and the effect of gender on the

level of cooperation was found to be ambiguous (Andersen, Bulte, Gneezy, & List, 2008; Croson

& Gneezy, 2009). The motives for cooperation were found to span from warm‐glow (Andreoni,

1990; Goeree, Holt, & Laury, 2002; Palfrey & Prisbrey, 1997, 1996), strategic behavior (Ambrus

& Pathak, 2011; Fischbacher & Gächter, 2010), and social motives (Croson, 2007) to confusion

(Andreoni, 1995; Houser & Kurzban, 2002). Yet, the degree of cooperation was consistently

found to decline toward the end of the experiment, a phenomenon described as an “end game

effect”(see, e.g., Ambrus & Pathak, 2011; Andreoni, 1988; Fischbacher & Gächter, 2010;

González, Güth, & Levati, 2005, to mention only a few).

Another strand of literature examined cooperation patterns under real‐life settings. Stoop,

Noussair, and van Soest (2012) and Noussair, van Soest, and Stoop (2015) carried out a VCM

field experiment among recreational fishermen. Unlike conventional laboratory VCM

experiments, instead of tokens converted to money, the game was played with a real‐life

product—a fishing catch. In their setting, if a fisherman avoids fishing, the other group

members gain monetary rewards. Under this setting, the observed pattern of behavior indicates

a low level of cooperation, consistent with the canonical model of renewable resource use.

The studies of Carlsson, Johansson‐Stenman, and Nam (2014) and Huck, Rasul, and

Shephard (2015) provide additional examples for the high degree of free riding observed in

contributions to real‐life public goods. Carlsson et al. (2014) conducted fundraising experiments

at four different points in time during 2005–2011 in rural Vietnam to measure people’s prosocial

behavior over time. The objective of these fundraising experiments was to construct wooden or

concrete bridges for the village inhabitants. The authors found a high degree of free‐riding

(more than 50% in two out of four experiments), particularly in experiments in which the

donations were made from their own resources. Huck et al. (2015) explored the effect of

different treatments, such as an equal match for each donated sum and leading donor, on the

level of donations. They sent 25,000 letters to the subscribers of the Bavarian State Opera asking

for donations to the opera but received only 922 donations (or 3.69% of the donation requests).

In both papers, the high degree of free‐riding (both among contributors and those who avoided

contributing) did not allow the establishment of a consistent positive correlation between the

extent of use of the public good and the amount contributed to it.

In the first part of the paper, we present a simple benchmark model of voluntary

contributions to a public good in which nindividuals contribute from

t

=0

to

t

T=−

1

and

gain benefit from the public good at period

T

. Within this setting, we derive the feedback Nash

equilibrium.

2

1

Zhang and Zhu (2011) found a positive correlation between the group size of contributors and contributions in a field experiment. They found that the

contribution to the Chinese Wikipedia by authors outside of mainland China decreased as a result of a Wikipedia website block by the Chinese government.

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For feedback equilibrium in the context of the public good provision, see also Battaglini, Nunnari, and Palfrey (2014, 2016), Bhattacharya, Tokovenko, and

Sardana (2017), Fershtman and Nitzan (1991), and Kessing (2007).

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