Relative performance of two simple incentive mechanisms in a public goods experiment

Bracht, Juergen; Figuières, Charles; Ratto, Marisa

doi:10.1016/j.jpubeco.2007.04.005

Cited by 43 publications

(29 citation statements)

References 27 publications

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“…Yet, the role of inequality that we have found 75 1 They have continuous strategy sets or a larger number of options to choose. 2 There is a unique subgame perfect Nash equilibrium in Andreoni and Varian, 1999 here sustains a result of , who stated that when an equal payoff outcome is reachable the mechanism better reduces the conflict between individual and collective rationality.…”

supporting

confidence: 52%

Choice overload, coordination and inequality: three hurdles to the effectiveness of the compensation mechanism?

2014

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In this paper we test the effectiveness of a compensation mechanism when a negative externality is produced. It allows agents suffering from the negative externality to compensate those who reduce its production. Transfers are implemented via a two-stage design which is an adaptation of Varian's mechanism. It has been previously tested in the lab with different 10 types of games, and its effectiveness turns out to depend on the experiment, for unclear reasons which we try to decipher in this paper. Three possible explanations, choice overload, mere coordination and inequality, are proposed and studied. We show that, other things equal, the larger the size of the strategy space, the lower the mechanism's efficiency (choice overload effect). Perhaps surprisingly, the data show that the appearance of additional equilibria does not 15 jeopardize effectiveness (no mere coordination effect). Finally, inequality of outcomes plays a key role (fairness effect).

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confidence: 52%

Choice overload, coordination and inequality: three hurdles to the effectiveness of the compensation mechanism?

2014

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“…In particular the endogenous determination of an enforcement mechanism has not been experimentally tested in this context and we analyse whether subjects are willing to implement such a mechanism. We apply a non-linear payoff function to design the theory of Buchholz et al (2014) in the same way as in Falkinger et al (2000) or Bracht et al (2008). In our setting without a central authority and an endogenously determined punishment/reward scheme, we find higher public good provision with the mechanism.…”

Section: Introductionmentioning

confidence: 87%

“…8 Fitting the experimental design to the based theory, the payoff function has to fulfil an underlying Cobb-Douglas utility function and the budget constraint described in (4). Therefore we implement the individual nonlinear payoff function also used by Falkinger et al (2000) and Bracht et al (2008) based on Keser (1996):…”

Section: Experimental Implementationmentioning

confidence: 99%

“…3 Their results show that the mean contributions are higher in the mechanism treatment. Bracht et al (2008) compare the two mechanisms in a laboratory experiment: compensation mechanism by Guttman (1978) implemented as subsidizing contributions in a pre-stage and the Falkinger mechanism with centralized subsidy. The results show higher public good provision with both mechanisms compared to public good provision without any mechanisms.…”

Section: Introductionmentioning

confidence: 99%

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Improving Voluntary Public Good Provision by a Non-Governmental, Endogenous Matching Mechanism: Experimental Evidence

Reif

Rübbelke

Löschel³

2014

SSRN Journal

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. Improving voluntary public good provision by a non-governmental AbstractSocial norms can help to foster cooperation and to overcome the free-rider problem in private provision of public goods. This paper focuses on the enforcement of social norms by a selfintroduced punishment and reward scheme. We analyse if subjects achieve to implement a normenforcement mechanism at their own expense by applying the theory of non-governmental normenforcement by Buchholz et al. (2014) in a laboratory experiment. Based on their theory without central authority and endogenously determined enforcement mechanism, we implement a twostage public good game: At the first stage subjects determine the strength of penalty/reward on their own and in the second stage they decide on their contributions to the public good. We find that the mechanism by Buchholz et al. (2014) leads to a higher public good contribution than without the use of any mechanism. Only in a few cases groups end up with a zero enforcement mechanism. This result indicates that subjects are apparently willing to contribute funds for implementing an enforcement mechanism. Moreover, higher enforcement parameters lead to higher public good contributions in the second stage, although too high enforcement parameters lead to unreachable theoretical optima. JEL Code:H41, C92

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“…Guttman 1978;Buchholz & Konrad 1995;Andreoni & Varian 1999;Charness et al 2007;Bracht et al 2008). In the following, whenever we talk about matching we refer to one-sided matching.…”

Section: Fundamentals Of Matching Schemesmentioning

confidence: 99%

Matching Schemes and Public Goods: A Review

Epperson

Reif

2017

SSRN Journal

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. Abstract: Matching schemes and public goods: A reviewMatching schemes, where a party matches the contribution of others, reduce the effective price of a good and aim to foster its demand. We review the empirical literature on the effectiveness of these schemes in the context of public goods, especially in the field of charitable giving. As different measures of effectiveness are used, we classify results according to (i) the level of public good provision, (ii) the amount of individuals' contributions, (iii) the likelihood to give and (iv) the contribution conditional on contributing a positive amount. Generalizing results is challenging, since context specific factors matter. Predominantly, a match is found to create a significant increase in public good provision without crowding out individuals' contributions, while the effect on the likelihood of giving and contribution condition on contributing a positive amount is nonnegative. The discussion reveals several avenues for future research, as putting stronger emphasizes on long term effects, public good competition or heterogeneity in responses. JEL-Code: D01, D64, H41, L31

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Relative performance of two simple incentive mechanisms in a public goods experiment

Cited by 43 publications

References 27 publications

Choice overload, coordination and inequality: three hurdles to the effectiveness of the compensation mechanism?

Choice overload, coordination and inequality: three hurdles to the effectiveness of the compensation mechanism?

Improving Voluntary Public Good Provision by a Non-Governmental, Endogenous Matching Mechanism: Experimental Evidence

Matching Schemes and Public Goods: A Review

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