Voting for Burden Sharing Rules in Public Goods Games

Abstract

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: Voting for Burden Sharing Rules in Public Goods GamesIn this experiment, we endogenize the choice of which contribution scheme is implemented in a public goods game. We investigate three rule-based contribution schemes. In a first step, players agree on a common group provision level using the principle of the smallest common denominator. Subsequently, this group investment is allocated according to a specific rule to individual minimum contributions. The game is implemented either as a Single-or a MultiPhase Game. In the Single-Phase Game, the contribution schemes are exogenously implemented. In the Multi-Phase Game, we let subjects vote on the rule-based contribution schemes. If a scheme obtains a sufficient majority it is implemented. In case no sufficient majority is reached, subjects have to make their contributions to the public good using the voluntary contribution mechanism (VCM). Our results suggest that the endogenous choice of a contribution scheme has an impact on the level of contributions. In case of a rule-based contribution scheme which equalizes payoffs, contributions are higher if subjects choose the scheme than in case the scheme is implemented exogenously. In contrast, contributions are higher if the VCM is implemented exogenously than in case a sufficient majority cannot be obtained and, therefore, subjects have to play the VCM.

Mandatory minimum contributions, heterogeneous endowments and voluntary public-good provision

“…For upper-income taxpayers, however, Gerbing finds that they perceive flat tax rates as more fair. In the context of a public-good game, where participants can vote for several minimum contribution schemes, which are intended to provide a jointly agreed minimum group provision level, Gallier et al (2014) find that the scheme which equalizes payoffs (similar to ProgMin) is mostly chosen by less wealthy players, while rich players mostly chose the scheme which equalizes contributions (similar to FixMin). Given this evidence and the pervasive calls for fairer tax systems implying tax breaks for lower and middle income classes together with tax increases for upper income classes, it is possible that an as fairer perceived distribution of mandatory minimum contributions (as, for example, in ProgMin) exerts a positive effect on individual and consequently total group contributions.…”

Recent Trends in Behavioral Environmental Economics

“…Are groups of heterogeneous agents able to reach an agreement on how to share the costs of providing a public good? Gallier et al (2016) experimentally investigate the performance of different burden sharing rules in different voting schemes. Despite the fact that preferences for different allocation schemes differ among agents, most groups agree upon a common scheme and consequently avoid an uncoordinated action.…”

“…With their investigations on the long-term impact of social information on residential water consumption, Ferraro et al (2011) find that only messages which contain social feedback have long lasting impacts two years after the message has been sent. Long-term impacts of monetary incentives (Kesternich et al 2016) and non-monetary behavioral interventions (Kesternich et al 2016b) have also recently been addressed in voluntary CO 2 offsetting programs. Kesternich et al (2016b) examine repeated voluntary contributions to a carbon offsetting program during the online purchase of longdistance bus tickets.…”

Public Goods and Minimum Provision Levels: Does the Institutional Formation Affect Cooperation?*

“…() find the same effect but also that it wears off as the minimum level is increased . A related body of literature focuses on the effects of letting subjects in public goods experiments both suggest and subsequently agree on the level for contribution obligations (e.g., Kroll et al ., ; Dannenberg, ; Dannenberg et al ., ; Kesternich et al ., ; Kube et al ., ; Gallier et al ., ) . The two papers closest to our paper are Kocher et al .…”