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Rebate rules in threshold public good provision

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Author Info

  • Spencer, Michael A.
  • Swallow, Stephen K.
  • Shogren, Jason F.
  • List, John A.

Abstract

This paper considers how six alternative rebate rules affect voluntary contributions in a threshold public-good experiment. The rules differ by (1) whether an individual can receive a proportional rebate of excess contributions, a winner-takes-all of any excess contributions, or a full rebate of one's contribution in the event the public good is provided and excess contributions exist, and (2) whether the probability of receiving a rebate is proportional to an individual's contribution relative to total contributions or is a simple uniform probability distribution set by the number of contributors. The paper adds to the existing experimental economics literature on threshold public goods by investigating both aggregate and individual demand revelation under the winner-take-all and random full-rebate rules. Half of the rules (proportional rebate, winner-take-all with uniform probability among all group members, and random full-rebate with uniform probability) provide total contributions that nearly equal total benefits, while the rest (winner-take-all with proportional probability, winner-take-all with uniform probability among contributors only, and random full-rebate with proportional probability) exceed benefits by over 30%. Only the proportional rebate rule is found to achieve both aggregate and individual demand revelation. Our experimental results have implications for both fundraisers and valuation practitioners.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 93 (2009)
Issue (Month): 5-6 (June)
Pages: 798-806

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Handle: RePEc:eee:pubeco:v:93:y:2009:i:5-6:p:798-806

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Web page: http://www.elsevier.com/locate/inca/505578

Related research

Keywords: Experiment Lottery Provision point Public good Rebate;

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References

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Citations

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Cited by:
  1. Astrid Dannenberg & Andreas Löschel & Gabriele Paolacci & Christiane Reif & Alessandro Tavoni, 2011. "Coordination under threshold uncertainty in a public goods game," Grantham Research Institute on Climate Change and the Environment Working Papers 64, Grantham Research Institute on Climate Change and the Environment.
  2. Robertas Zubrickas, 2013. "The provision point mechanism with reward money," ECON - Working Papers 114, Department of Economics - University of Zurich, revised Oct 2013.
  3. Julian Rauchdobler & Rupert Sausgruber & Jean-Robert Tyran, 2010. "Voting on Thresholds for Public Goods: Experimental Evidence," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 66(1), pages 34-64, March.
  4. Felix Koelle, 2012. "Heterogeneity and Cooperation in Privileged Groups: The Role of Capability and Valuation on Public Goods Provision," Cologne Graduate School Working Paper Series 03-08, Cologne Graduate School in Management, Economics and Social Sciences.
  5. Urs Fischbacher & Werner Güth & M. Vittoria Levati, 2011. "Crossing the Point of No Return: A Public Goods Experiment," Jena Economic Research Papers 2011-059, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  6. Kaplan, Jonathan D. & Howitt, Richard E. & Kroll, Stephan, 2012. "Private Provision of a Stochastic Common Property Resource," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124855, Agricultural and Applied Economics Association.
  7. Zhi Li & Christopher Anderson & Stephen K. Swallow, 2012. "Uniform Price Mechanisms for Threshold Public Goods Provision: An Experimental Investigation," Working Papers 14, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
  8. Werner Güth & Anastasios Koukoumelis & M. Vittoria Levati, 2011. ""One man's meat is another man's poison." An experimental study of voluntarily providing public projects that raise mixed feelings," Jena Economic Research Papers 2011-034, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  9. Werner Güth & Anastasios Koukoumelis & M. Vittoria Levati & Matteo Ploner, 2012. "Public projects benefiting some and harming others: three experimental studies," Jena Economic Research Papers 2012-034, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  10. Krasteva, Silvana & Yildirim, Huseyin, 2013. "(Un)Informed charitable giving," Journal of Public Economics, Elsevier, vol. 106(C), pages 14-26.
  11. BELLEFLAMME, Paul & LAMBERT, Thomas & SCHWIENBACHER, Armin, 2011. "Crowdfunding: tapping the right crowd," CORE Discussion Papers 2011032, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  12. Gregor, Martin, 2012. "Contest for power in organizations," Economics Letters, Elsevier, vol. 114(3), pages 280-283.
  13. repec:pad:wpaper:0171 is not listed on IDEAS
  14. Newell, Laurie W. & Swallow, Stephen K., 2013. "Real-payment choice experiments: Valuing forested wetlands and spatial attributes within a landscape context," Ecological Economics, Elsevier, vol. 92(C), pages 37-47.

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