IDEAS home Printed from https://ideas.repec.org/a/eee/pubeco/v159y2018icp104-115.html
   My bibliography  Save this article

The Binary Conditional Contribution Mechanism for public good provision in dynamic settings — Theory and experimental evidence

Author

Listed:
  • Reischmann, Andreas
  • Oechssler, Joerg

Abstract

We present a new and simple mechanism for repeated public good environments. In the Binary Conditional Contribution Mechanism (BCCM), every agent's message has the form, “I am willing to contribute to the public good if at least k agents contribute in total.” This mechanism offers agents risk-free strategies, which we call unexploitable. We prove that if agents choose unexploitable messages in a Better Response Dynamics model, all stable outcomes of the BCCM are Pareto efficient. We conduct a laboratory experiment to investigate whether observed behavior is consistent with this prediction. Subjects play the BCCM in an environment with complete information and homogeneous valuations or in a second environment with incomplete information and heterogeneous valuations. In both cases all stable outcomes in the experiment are in line with the prediction of the dynamic model. Furthermore, comparison treatments with the Voluntary Contribution Mechanism show that the BCCM leads to significantly higher contribution rates.

Suggested Citation

  • Reischmann, Andreas & Oechssler, Joerg, 2018. "The Binary Conditional Contribution Mechanism for public good provision in dynamic settings — Theory and experimental evidence," Journal of Public Economics, Elsevier, vol. 159(C), pages 104-115.
    • Handle: RePEc:eee:pubeco:v:159:y:2018:i:c:p:104-115
    DOI: 10.1016/j.jpubeco.2018.02.009
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0047272718300355
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jpubeco.2018.02.009?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Groves, Theodore & Ledyard, John O, 1977. "Optimal Allocation of Public Goods: A Solution to the "Free Rider" Problem," Econometrica, Econometric Society, vol. 45(4), pages 783-809, May.
    2. Kreps, David M. & Milgrom, Paul & Roberts, John & Wilson, Robert, 1982. "Rational cooperation in the finitely repeated prisoners' dilemma," Journal of Economic Theory, Elsevier, vol. 27(2), pages 245-252, August.
    3. Ben Greiner, 2015. "Subject pool recruitment procedures: organizing experiments with ORSEE," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 1(1), pages 114-125, July.
    4. Nicholas E. Burger & Charles D. Kolstad, 2009. "Voluntary Public Goods Provision, Coalition Formation, and Uncertainty," NBER Working Papers 15543, National Bureau of Economic Research, Inc.
    5. Fischbacher, Urs & Gachter, Simon & Fehr, Ernst, 2001. "Are people conditionally cooperative? Evidence from a public goods experiment," Economics Letters, Elsevier, vol. 71(3), pages 397-404, June.
    6. Rondeau, Daniel & D. Schulze, William & Poe, Gregory L., 1999. "Voluntary revelation of the demand for public goods using a provision point mechanism," Journal of Public Economics, Elsevier, vol. 72(3), pages 455-470, June.
    7. Luca Corazzini & Marco Faravelli & Luca Stanca, 2010. "A Prize To Give For: An Experiment on Public Good Funding Mechanisms," Economic Journal, Royal Economic Society, vol. 120(547), pages 944-967, September.
    8. Mark Bagnoli & Barton L. Lipman, 1989. "Provision of Public Goods: Fully Implementing the Core through Private Contributions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 56(4), pages 583-601.
    9. Ledyard, John O., "undated". "Public Goods: A Survey of Experimental Research," Working Papers 861, California Institute of Technology, Division of the Humanities and Social Sciences.
    10. Kocher, Martin G. & Cherry, Todd & Kroll, Stephan & Netzer, Robert J. & Sutter, Matthias, 2008. "Conditional cooperation on three continents," Economics Letters, Elsevier, vol. 101(3), pages 175-178, December.
    11. Arthur J.H.C. Schram & Sander Onderstal, 2009. "Bidding To Give: An Experimental Comparison Of Auctions For Charity," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(2), pages 431-457, May.
    12. Rose, Steven K. & Clark, Jeremy & Poe, Gregory L. & Rondeau, Daniel & Schulze, William D., 2002. "The private provision of public goods: tests of a provision point mechanism for funding green power programs," Resource and Energy Economics, Elsevier, vol. 24(1-2), pages 131-155, February.
    13. Edward Clarke, 1971. "Multipart pricing of public goods," Public Choice, Springer, vol. 11(1), pages 17-33, September.
    14. Urs Fischbacher & Simon Gachter, 2010. "Social Preferences, Beliefs, and the Dynamics of Free Riding in Public Goods Experiments," American Economic Review, American Economic Association, vol. 100(1), pages 541-556, March.
    15. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
    16. Rondeau, Daniel & Poe, Gregory L. & Schulze, William D., 2005. "VCM or PPM? A comparison of the performance of two voluntary public goods mechanisms," Journal of Public Economics, Elsevier, vol. 89(8), pages 1581-1592, August.
    17. John Morgan & Martin Sefton, 2000. "Funding Public Goods with Lotteries: Experimental Evidence," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 67(4), pages 785-810.
    18. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, March.
    19. Reischmann, Andreas, 2015. "The Conditional Contribution Mechanism for the Provision of Public Goods," Working Papers 0586, University of Heidelberg, Department of Economics.
    20. Bagnoli, Mark & Ben-David, Shaul & McKee, Michael, 1992. "Voluntary provision of public goods : The multiple unit case," Journal of Public Economics, Elsevier, vol. 47(1), pages 85-106, February.
    21. Ostrom, Elinor & Walker, James & Gardner, Roy, 1992. "Covenants with and without a Sword: Self-Governance Is Possible," American Political Science Review, Cambridge University Press, vol. 86(2), pages 404-417, June.
    22. , J. & ,, 2012. "Designing stable mechanisms for economic environments," Theoretical Economics, Econometric Society, vol. 7(3), September.
    23. Simon Gachter & Ernst Fehr, 2000. "Cooperation and Punishment in Public Goods Experiments," American Economic Review, American Economic Association, vol. 90(4), pages 980-994, September.
    24. Healy, Paul J., 2006. "Learning dynamics for mechanism design: An experimental comparison of public goods mechanisms," Journal of Economic Theory, Elsevier, vol. 129(1), pages 114-149, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Oechssler, Joerg & Reischmann, Andreas & Sofianos, Andis, 2022. "The conditional contribution mechanism for repeated public goods – The general case," Journal of Economic Theory, Elsevier, vol. 203(C).
    2. Konstantinos Georgalos & Indrajit Ray & Sonali SenGupta, 2020. "Nash versus coarse correlation," Experimental Economics, Springer;Economic Science Association, vol. 23(4), pages 1178-1204, December.
    3. Tatsuki Homma & Ryosuke Iba & Junyi Shen & Takuma Wakayama & Hirofumi Yamamura & Takehiko Yamato, 2022. "The pivotal mechanism versus the voluntary contribution mechanism: an experimental comparison," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 58(3), pages 429-505, April.
    4. Susanne Goldluecke & Thomas Troeger, 2023. "The Multiple-Volunteers Principle for Assigning Unpleasant and Pleasant Tasks," CRC TR 224 Discussion Paper Series crctr224_2023_464, University of Bonn and University of Mannheim, Germany.
    5. Goeschl, Timo & Soldà, Alice, 2023. "(Un)Trustworthy Pledges and Cooperation in Social Dilemmas," Working Papers 0728, University of Heidelberg, Department of Economics.
    6. Lippert, Steffen & Tremewan, James, 2021. "Pledge-and-review in the laboratory," Games and Economic Behavior, Elsevier, vol. 130(C), pages 179-195.
    7. Trivikram Dokka & Hervé Moulin & Indrajit Ray & Sonali SenGupta, 2023. "Equilibrium design in an n-player quadratic game," Review of Economic Design, Springer;Society for Economic Design, vol. 27(2), pages 419-438, June.
    8. Timo Goeschl, 2023. "(Un)Trustworthy Pledges And Cooperation In Social Dilemmas," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 23/1070, Ghent University, Faculty of Economics and Business Administration.
    9. Trivikram Dokka Venkata Satyanaraya & Herve Moulin & Indrajit Ray & Sonali Sen Gupta, 2020. "Equilibrium Design by Coarse Correlation in Quadratic Games," Working Papers 301895429, Lancaster University Management School, Economics Department.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Reischmann, Andreas, 2016. "Conditional Contribution Mechanisms for the Provision of Public Goods in Dynamic Settings - Theory and Experimental Evidence," VfS Annual Conference 2016 (Augsburg): Demographic Change 145613, Verein für Socialpolitik / German Economic Association.
    2. Reischmann, Andreas, 2015. "Conditional vs. Voluntary Contribution Mechanism – An Experimental Study," Working Papers 0587, University of Heidelberg, Department of Economics.
    3. Oechssler, Joerg & Reischmann, Andreas & Sofianos, Andis, 2022. "The conditional contribution mechanism for repeated public goods – The general case," Journal of Economic Theory, Elsevier, vol. 203(C).
    4. Li, Zhi & Liu, Pengfei & Swallow, Stephen K., 2017. "Supporting Private Provision of Ecosystem Services through Contracts: Evidence from Lab and Field Experiments," 2018 Allied Social Sciences Association (ASSA) Annual Meeting, January 5-7, 2018, Philadelphia, Pennsylvania 266300, Agricultural and Applied Economics Association.
    5. Tatsuki Homma & Ryosuke Iba & Junyi Shen & Takuma Wakayama & Hirofumi Yamamura & Takehiko Yamato, 2022. "The pivotal mechanism versus the voluntary contribution mechanism: an experimental comparison," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 58(3), pages 429-505, April.
    6. Reischmann, Andreas, 2015. "The Conditional Contribution Mechanism for the Provision of Public Goods," Working Papers 0586, University of Heidelberg, Department of Economics.
    7. Anya Savikhin Samek & Roman Sheremeta, 2014. "Recognizing contributors: an experiment on public goods," Experimental Economics, Springer;Economic Science Association, vol. 17(4), pages 673-690, December.
    8. Cason, Timothy N. & Zubrickas, Robertas, 2019. "Donation-based crowdfunding with refund bonuses," European Economic Review, Elsevier, vol. 119(C), pages 452-471.
    9. Spencer, Michael A. & Swallow, Stephen K. & Shogren, Jason F. & List, John A., 2009. "Rebate rules in threshold public good provision," Journal of Public Economics, Elsevier, vol. 93(5-6), pages 798-806, June.
    10. Bose, Bijetri & Rabotyagov, Sergey, 2018. "Provision of public goods using a combination of lottery and a provision point," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 73(C), pages 99-115.
    11. Swallow, Stephen K. & Anderson, Christopher M. & Uchida, Emi, 2018. "The Bobolink Project: Selling Public Goods From Ecosystem Services Using Provision Point Mechanisms," Ecological Economics, Elsevier, vol. 143(C), pages 236-252.
    12. Kirchkamp, Oliver & Mill, Wladislaw, 2020. "Conditional cooperation and the effect of punishment," Journal of Economic Behavior & Organization, Elsevier, vol. 174(C), pages 150-172.
    13. Albrecht, Felix & Kube, Sebastian & Traxler, Christian, 2018. "Cooperation and norm enforcement - The individual-level perspective," Journal of Public Economics, Elsevier, vol. 165(C), pages 1-16.
    14. Andrej Angelovski & Tibor Neugebauer & Maroš Servatka, 2019. "Can Rank-Order Competition Resolve the Free-Rider Problem in the Voluntary Provision of Impure Public Goods? Experimental Evidence," Working Papers CESARE 1705, Dipartimento di Economia e Finanza, LUISS Guido Carli.
    15. Theodore Eisenberg & Christoph Engel, 2012. "Assuring Adequate Deterrence in Tort: A Public Good Experiment," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2012_07, Max Planck Institute for Research on Collective Goods.
    16. Kocher, Martin G. & Martinsson, Peter & Matzat, Dominik & Wollbrant, Conny, 2015. "The role of beliefs, trust, and risk in contributions to a public good," Journal of Economic Psychology, Elsevier, vol. 51(C), pages 236-244.
    17. Zhi Li & Pengfei Liu & Stephen K. Swallow, 2021. "Assurance Contracts to Support Multi-Unit Threshold Public Goods in Environmental Markets," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 80(2), pages 339-378, October.
    18. Florian Engl & Arno Riedl & Roberto Weber, 2021. "Spillover Effects of Institutions on Cooperative Behavior, Preferences, and Beliefs," American Economic Journal: Microeconomics, American Economic Association, vol. 13(4), pages 261-299, November.
    19. Henrik Orzen, 2005. "Fundraising through Competition: Evidence from the Lab," Discussion Papers 2005-04, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    20. Auerswald, Heike & Schmidt, Carsten & Thum, Marcel & Torsvik, Gaute, 2018. "Teams in a public goods experiment with punishment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 72(C), pages 28-39.

    More about this item

    Keywords

    Experimental economics; Public goods; Mechanism design; Better response dynamics;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:pubeco:v:159:y:2018:i:c:p:104-115. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505578 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.