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The Source and Significance of Confusion in Public Goods Experiments

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  • Ferraro Paul J

    ()
    (Georgia State University)

  • Vossler Christian A

    ()
    (University of Tennessee)

Abstract

Economists use public goods experiments to develop and test theories of individual preferences and institutional design. Previous work demonstrates many participants in public goods experiments contribute to the public good out of confusion. We design experiments to provide insights on the consequences and causes of confusion. We establish that confusion amounts to more than statistical noise and does not dissipate with repetition (i.e. learning). Confused subjects use experimental parameters and the behavior of other players as cues, which confounds treatment effects and traditional strategies to identify other-regarding preferences through exogenous parameter changes and the modeling of reactions to other subjects’ decisions. We argue that confusion stems from an inaccurate understanding of game incentives (“failure of game form recognition”), which is a consequence of the framing and inadequate payoff information in standard instructions. Modified instructions can substantially reduce confusion, and, in turn, change the distribution of contributions to the public good.

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Bibliographic Info

Article provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.

Volume (Year): 10 (2010)
Issue (Month): 1 (July)
Pages: 1-42

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Handle: RePEc:bpj:bejeap:v:10:y:2010:i:1:n:53

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Cited by:
  1. Ralph-C Bayer & Elke Renner & Rupert Sausbruber, 2012. "Confusion and Learning in the Voluntary Contributions Game," Discussion Papers 2012-18, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  2. Zizzo, Daniel John, 2013. "Claims and confounds in economic experiments," Journal of Economic Behavior & Organization, Elsevier, vol. 93(C), pages 186-195.
  3. Alexander Smith, 2012. "Comment on social preferences, beliefs, and the dynamics of free riding in public good experiments," Economics Bulletin, AccessEcon, vol. 32(1), pages 923-931.
  4. Guillén, Pablo & Hing, Alexander, 2013. "Lying through Their Teeth: Third Party Advice and Truth Telling in a Strategy Proof Mechanism," Working Papers 2013-11, University of Sydney, School of Economics.
  5. Toke Reinholt Fosgaard & Lars Gårn Hansen & Erik Wengström, 2011. "Framing and Misperceptions in a Public Good Experiment," IFRO Working Paper 2011/11, University of Copenhagen, Department of Food and Resource Economics, revised Oct 2012.
  6. Ulrik H. Nielsen & Jean-Robert Tyran & Erik Wengström, 2013. "Second Thoughts on Free Riding," Discussion Papers 13-08, University of Copenhagen. Department of Economics.

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