Democracy and Compliance in Public Goods Games

Abstract

I investigate if, how, and why the effect of a contribution rule in a public goods game depends on how it is implemented: endogenously chosen or externally imposed. The rule prescribes full contributions to the public good backed by a nondeterrent sanction for those who do not comply. My experimental design allows me to disentangle to what extent the effect of the contribution rule under democracy is driven by self-selection of treatments, information transmitted via the outcome of the referendum, and democracy per se. In case treatments are endogenously chosen via a democratic decision-making process, the contribution rule significantly increases contributions to the public good. However, democratic participation does not affect participants' contribution behavior directly, after controlling for self-selection of treatments and the information transmitted by voting.

The Choice of Institutions to Solve Cooperation Problems: A Survey of Experimental Research

“…Vollan et al 2017who consider a formal non-deterrent punishment scheme report an average contribution rate of 38 percent when groups fail to implement the institution and a contribution rate of 47 percent when the game is exogenously assigned. Similar results are reported by Sutter and Weck-Hannemann (2004), Sutter et al (2010), Kocher et al (2016), and Gallier (2017). Four studies provide comparisons where the differences between the endogenous case and the exogenous case are positive but small (Grimm and Mengel, 2009;Dal Bó et al, 2010;Sutter et al, 2010;and Dannenberg et al, 2019).…”

“…The authors explain this finding with the importance and long history of authoritarian norms in China. Gallier (2017) and Dannenberg et al (2019) also report only small and insignificant differences in cooperation between endogenously and exogenously implemented institutions, even though their experiments were conducted with German students. A possible explanation for this result in Gallier (2017) may be that the subjects play ten rounds of a standard public goods game before they vote on the implementation of a formal non-deterrent punishment institution.…”

“…In this section we describe if there are certain individual characteristics and attitudes that influence participants' decision to vote for or against enacting the institution. A common finding is that subjects with a strong cooperative inclination vote in favor of the institution (Dal Bó et al, 2010;Ertan et al, 2009;Grimm and Mengel, 2009;Sutter and Weck-Hannemann, 2003;2004;Kocher et al, 2016;Vollan et al, 2017;Gallier, 2017;Fehr and Williams, 2017). Furthermore, subjects who have experienced very low levels of cooperation in the past are more likely to vote in favor of the institution (Bohnet and Kübler, 2005;Barrett and Dannenberg, 2017;Dal Bó et al, 2010;Dannenberg et al, 2019).…”

“…Consequently, 26 percent of the difference is explained by the democracy effect. Using the same randomization technique for a non-deterrent formal punishment scheme, Gallier (2017) finds that only 32 percent of the difference in contribution rates between an endogenously chosen and rejected institution can be attributed to the institution effect. The information effect explains 45 percent of the difference, 21 percent of the difference can be attributed to the selection effect, and 5 percent to the democracy effect.…”

“…,Kocher et al (2016),Vollan et al (2017), and Martinsson and Persson (2019) find a small positive effect.13 The studies by Weck-Hannemann (2003, 2004), Tyran andFeld (2006),Grimm and Mengel (2009),Sutter et al (2010),Andreoni and Gee (2012),Gallier (2017), and Dannenberg et al (2019) find a negative effect.…”