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Is there a hidden cost of imposing a minimum contribution level for public good contributions?

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  • Kocher, Martin G.
  • Martinsson, Peter
  • Persson, Emil
  • Wang, Xianghong

Abstract

We examine the effects of either exogenously imposing or endogenously letting subjects choose whether to impose minimum contribution levels (MCLs) in a linear public goods experiment using the strategy method. Our results on contribution levels to the public goods are fairly independent of how MCLs are imposed. We find that the main effect of an MCL on unconditional contributions is that it increases low contribution levels to the MCL imposed, while the effect of those contributing more than the MCL before its introduction depends on the size of the MCL. Unexpectedly, there is much more crowding out for a low MCL than for a relatively high MCL. However, the distribution of contribution types is stable across different MCLs.

Suggested Citation

  • Kocher, Martin G. & Martinsson, Peter & Persson, Emil & Wang, Xianghong, 2016. "Is there a hidden cost of imposing a minimum contribution level for public good contributions?," Journal of Economic Psychology, Elsevier, vol. 56(C), pages 74-84.
    • Handle: RePEc:eee:joepsy:v:56:y:2016:i:c:p:74-84
    DOI: 10.1016/j.joep.2016.05.007
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    3. Peter Martinsson & Emil Persson, 2019. "Public Goods and Minimum Provision Levels: Does the Institutional Formation Affect Cooperation?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 121(4), pages 1473-1499, October.
    4. Bouma, J.A. & Nguyen, Binh & van der Heijden, Eline & Dijk, J.J., 2018. "Analysing Group Contract Design Using a Lab and a Lab-in-the-Field Threshold Public Good Experiment," Discussion Paper 2018-049, Tilburg University, Center for Economic Research.
    5. Bogliacino, Francesco & Mantilla, César & Niño, Daniel, 2023. "Economic incentives and political inequality in the management of environmental public goods," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 104(C).
    6. Nhim, Tum & Schuch, Esther & Richter, Andries, 2023. "Water scarcity and support for costly institutions in public goods: Experimental evidence from Cambodia," Ecological Economics, Elsevier, vol. 212(C).
    7. Hofmann, Elisa & Kyriacou, Lucas & Schmidt, Klaus M., 2021. "A Model United Nations Experiment on Climate Negotiations," Rationality and Competition Discussion Paper Series 266, CRC TRR 190 Rationality and Competition.
    8. Schmidt, Klaus M., 2021. "Das Design von Klimaschutzverhandlungen," Rationality and Competition Discussion Paper Series 270, CRC TRR 190 Rationality and Competition.
    9. Thomas Markussen & Jean-Robert Tyran, 2023. "Is There a Dividend of Democracy? Experimental Evidence from Cooperation Games," CESifo Working Paper Series 10616, CESifo.
    10. Lina Restrepo-Plaza & Enrique Fatas, 2023. "Building inclusive institutions in polarized scenarios," Constitutional Political Economy, Springer, vol. 34(1), pages 88-110, March.
    11. Dannenberg, Astrid & Gallier, Carlo, 2019. "The choice of institutions to solve cooperation problems: A survey of experimental research," ZEW Discussion Papers 19-021, ZEW - Leibniz Centre for European Economic Research.
    12. Chan, Nathan W. & Wolk, Leonard, 2020. "Cost-effective giving with multiple public goods," Journal of Economic Behavior & Organization, Elsevier, vol. 173(C), pages 130-145.
    13. Martinsson, Peter & Medhin, Haileselassie & Persson, Emil, 2016. "Framing and Minimum Levels in Public Good Provision," Working Papers in Economics 656, University of Gothenburg, Department of Economics.
    14. Astrid Dannenberg & Carlo Gallier, 2019. "The Choice of Institutions to Solve Cooperation Problems: A Survey of Experimental Research," MAGKS Papers on Economics 201911, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    15. Hofmann Elisa & Kyriacou Lucas & Schmidt Klaus M., 2023. "A Model United Nations Experiment on Climate Negotiations," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 243(5), pages 543-566, October.
    16. Gallier, Carlo, 2020. "Democracy and compliance in public goods games," European Economic Review, Elsevier, vol. 121(C).

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    More about this item

    Keywords

    Cooperation; China; Experiment; Minimum level; Public good;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers

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