Dynamic Voluntary Contributions to a Discrete Public Good: Experimental Evidence

Diev, Pavel; Hichri, Walid

doi:10.2139/ssrn.1679771

Cited by 20 publications

(3 citation statements)

References 23 publications

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“…In order to test for a ratchet effect in a social dilemma, our public goods game is played in discrete time with cumulating benefits and contributions that depend on the period before. In addition, we use different ratchet principles that prescribe that contributions cannot be adjusted downwards or have to increase to investigate how the stringency of the 5 Similar results are obtained in other cooperation problems played in continuous time, such as threshold public goods games (Diev and Hichri 2008) and public goods games with different aggregation technologies (Güth et al 2002). Fellner et al (2003) made an early attempt to relate the ratchet effect to the private provision of public goods in discrete time.…”

Section: Introductionmentioning

confidence: 70%

The ratchet effect in social dilemmas

Gallier

Sturm

2021

Journal of Economic Behavior & Organization

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In this paper, we investigate whether dynamic incentive schemes lead to a ratchet effect in a social dilemma. We test whether subjects strategically restrict their contribution levels at the beginning of a cumulative public goods game in order to avoid high obligations in the future and how this affects efficiency. The incentive schemes prescribe that individual contributions have to be at least as high as, or strictly higher than, contributions in the previous period. We observe a substantial and statistically significant ratchet effect. Participants reduce their public good contribution levels at the beginning of the game, anticipating that higher contributions imply higher minimum contribution levels in the future, which increases the risk of being exploited by freeriders. While the dynamic incentive schemes lead to increasing contribution levels over the course of the game, this increase is not strong enough to compensate the efficiency losses at the beginning.

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Section: Introductionmentioning

confidence: 70%

The ratchet effect in social dilemmas

Gallier

Sturm

2021

Journal of Economic Behavior & Organization

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“…There are other studies that consider the sequential provision of public goods by looking at how a gradual decision process can affect the provision in a static public goods game (Dorsey, 1992; Duffy et al., 2007; Choi et al., 2008; Diev and Hichri, 2008; Choi et al., 2011). Though the decision is made over multiple periods, players' utilities are determined only by the final level of the public good in those studies.…”

Section: Related Literaturementioning

confidence: 99%

Irreversibility and Monitoring in Dynamic Games: Experimental Evidence

Choi

Guéron

et al. 2022

Int Economic Review

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This article provides experimental evidence on the impacts of irreversibility and imperfect monitoring on the efficiency and the equity of a repeated public goods game. We find that irreversibility and imperfect monitoring both lead to inefficient and unequal outcomes through different channels. Irreversibility lowers public goods contribution in earlier periods and makes the initial‐period contribution gap between two players long‐lasting. Imperfect monitoring hampers conditional cooperation and persistently reduces group contribution. A finite mixture estimation with conditional cooperators provides a coherent account of the treatment effects.

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“…where it should be noted that agent j takes y R (g) as given. 11 The objective function shows that an agent has a clear trade off: a dollar in investment produces a marginal benefit α 2 √ g + δv R (y), the marginal cost is −1, a dollar less in private consumption. The first constraint shows that at the maximum the agent can increase the investment of the other players (i.e., n−1 n y R (g)) by W +g n .…”

Section: Reversible Investment Economiesmentioning

confidence: 99%

The Dynamic Free Rider Problem: A Laboratory Study

2012

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We report the results from an experiment designed explicitly to study the Markov Perfect Equilibrium (MPE) dynamics of free riding behavior in the accumulation of a durable public good. We consider two cases: economies with reversibility (RIE), where the agents can either increase or decrease the accumulated stock; and economies with irreversibility (IIE), where contributions are non-negative. Our findings support the key qualitative prediction of MPE: IIE converges to an accumulated level of public good that is an order of magnitude higher than RIE. We also find that the accumulation path is inefficiently slow in both RIE and IIE, and the public good is significantly under-provided. JEL Classification: C72, C73, C78, C92, H41We are grateful for comments from a number of seminar audiences at universities and conferences. We thank Lydia Mechtenberg for detailed comments. Battaglini gratefully acknowledges financial support from NSF (SES-0418150) and the Alfred P. Sloan Foundation. Palfrey gratefully acknowledges financial support of grants from the National Science Foundation (SES-0962802) and the Gordon and Betty Moore Foundation. Dustin Beckett provided valuable research assistance.

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Dynamic Voluntary Contributions to a Discrete Public Good: Experimental Evidence

Cited by 20 publications

References 23 publications

The ratchet effect in social dilemmas

The ratchet effect in social dilemmas

Irreversibility and Monitoring in Dynamic Games: Experimental Evidence

The Dynamic Free Rider Problem: A Laboratory Study

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