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Voting on Thresholds for Public Goods: Experimental Evidence

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  • Julian Rauchdobler
  • Rupert Sausgruber
  • Jean-Robert Tyran

Abstract

Introducing a threshold in the sense of a minimal project size transforms a public-good game with an inefficient equilibrium into a coordination game with a set of Pareto-superior equilibria. Thresholds may therefore improve efficiency in the voluntary provision of public goods. In our one-shot experiment, we find that coordination often fails and exogenously imposed thresholds are ineffective at best and often counterproductive. This holds over a range of threshold levels and refund rates. We test whether thresholds perform better if they are endogenously chosen, i.e., whether a threshold is approved in a referendum, because voting may facilitate coordination due to signaling and commitment effects. We find that voting does have signaling and commitment effects, but they are not strong enough to significantly improve the efficiency of thresholds.

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Bibliographic Info

Article provided by Mohr Siebeck, Tübingen in its journal FinanzArchiv.

Volume (Year): 66 (2010)
Issue (Month): 1 (March)
Pages: 34-64

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Handle: RePEc:mhr:finarc:urn:sici:0015-2218(201003)66:1_34:votfpg_2.0.tx_2-v

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Keywords: Provision of Public Goods; Threshold; Voting; Experiments;

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References

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Citations

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Cited by:
  1. Franziska Tausch & Jan Potters & Arno Riedl, 2010. "Preferences for Redistribution and Pensions. What can we Learn from Experiments?," CESifo Working Paper Series 3156, CESifo Group Munich.
  2. Bernal-Escobar, Adriana & Cuervo-Sánchez, Rafael & Pinzon-Trujillo, Gonzalo & Maldonado, Jorge H., 2013. "Glacier Melting and Retreat: Understanding the Perception of Agricultural Households That Face the Challenges of Climate Change," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149005, Agricultural and Applied Economics Association.
  3. De Hoop, Thomas & Van Kempen, Luuk & Fort, Ricardo, 2010. "Do people invest in local public goods with long-term benefits: Experimental evidence from a shanty town in Peru," MPRA Paper 24968, University Library of Munich, Germany.
  4. Carlsson, Fredrik & Johansson-Stenman, Olof & Pham Khanh, Nam, 2011. "Funding a New Bridge in Rural Vietnam: A field experiment on conditional cooperation and default contributions," Working Papers in Economics 503, University of Gothenburg, Department of Economics.
  5. Todd Cherry & David McEvoy, 2013. "Enforcing Compliance with Environmental Agreements in the Absence of Strong Institutions: An Experimental Analysis," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 54(1), pages 63-77, January.
  6. Adriana Bernal Escobar & Rafael Cuervo & Gonzalo Pinzón Trujillo & Jorge H. Maldonado., 2013. "Derretimiento y Retroceso Glaciar: Entendiendo la Percepción de los Hogares Agrícolas que se Enfrentan a los Desafíos del Cambio Climático," DOCUMENTOS CEDE 010679, UNIVERSIDAD DE LOS ANDES-CEDE.

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