IDEAS home Printed from https://ideas.repec.org/a/spr/grdene/v27y2018i4d10.1007_s10726-018-9578-6.html
   My bibliography  Save this article

The Impact of Dynamic Feedback and Personal Budgets on Arousal and Funding Behaviour in Participatory Budgeting

Author

Listed:
  • Claudia Niemeyer

    (Karlsruhe Institute of Technology)

  • Timm Teubner

    (Technical University of Berlin)

  • Margeret Hall

    (University of Nebraska at Omaha)

  • Christof Weinhardt

    (Karlsruhe Institute of Technology)

Abstract

Public institutions as well as corporations seek to engage their constituents and employees in participatory processes to enhance engagement in decision-making. This paper proposes a group decision method of fusing crowdfunding and participatory budget allocation. In this approach, a central institution lets their members decide over budget allocation by endowing members with individual budgets. Participants are free to allocate their budgets to projects. A project is realized if its respective cost threshold is surpassed. We evaluate different design parameters of such mechanisms for group decisions and, based on this, the allocation of institutional budgets within a controlled laboratory experiment. The first design parameter is feedback on funding status, which can either be static (a one-shot decision, simultaneous funding) or dynamic (sequential decisions, repeated funding with continuous feedback). The second variable refers to the fraction of budget that may be kept privately by individuals and is not forfeit if not assigned to projects. Building on threshold public goods literature, we investigate how these parameters affect participants’ investment behaviour, their excitement, and overall welfare. We find that mechanisms including feedback net higher welfare gains as well as higher levels of arousal. Higher personal budget shares drive excitement but lead to lower welfare gains.

Suggested Citation

  • Claudia Niemeyer & Timm Teubner & Margeret Hall & Christof Weinhardt, 2018. "The Impact of Dynamic Feedback and Personal Budgets on Arousal and Funding Behaviour in Participatory Budgeting," Group Decision and Negotiation, Springer, vol. 27(4), pages 611-636, August.
    • Handle: RePEc:spr:grdene:v:27:y:2018:i:4:d:10.1007_s10726-018-9578-6
    DOI: 10.1007/s10726-018-9578-6
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10726-018-9578-6
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10726-018-9578-6?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. 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.
    2. Fabrice Etilé & Pierre Combris & Urs Fischbacher & Simeon Schudy & Sabrina Teyssier, 2014. "Heterogeneous reactions to heterogeneity in returns from public goods," PSE-Ecole d'économie de Paris (Postprint) hal-02076872, HAL.
    3. Marko Sarstedt & Christian Ringle, 2010. "Treating unobserved heterogeneity in PLS path modeling: a comparison of FIMIX-PLS with different data analysis strategies," Journal of Applied Statistics, Taylor & Francis Journals, vol. 37(8), pages 1299-1318.
    4. Eliza Lee & Ian Thynne & Baogang He, 2011. "Civic engagement through participatory budgeting in China: Three different logics at work," Public Administration & Development, Blackwell Publishing, vol. 31(2), pages 122-133, May.
    5. Rachel Croson & Melanie Marks, 2000. "Step Returns in Threshold Public Goods: A Meta- and Experimental Analysis," Experimental Economics, Springer;Economic Science Association, vol. 2(3), pages 239-259, March.
    6. Corazzini, Luca & Cotton, Christopher & Valbonesi, Paola, 2015. "Donor coordination in project funding: Evidence from a threshold public goods experiment," Journal of Public Economics, Elsevier, vol. 128(C), pages 16-29.
    7. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
    8. Victor Bekkers & Arthur Edwards & Rebecca Moody & Henri Beunders, 2011. "Caught By Surprise?," Public Management Review, Taylor & Francis Journals, vol. 13(7), pages 1003-1021, October.
    9. Mollick, Ethan, 2014. "The dynamics of crowdfunding: An exploratory study," Journal of Business Venturing, Elsevier, vol. 29(1), pages 1-16.
    10. Urs Fischbacher & Simeon Schudy & Sabrina Teyssier, 2014. "Heterogeneous reactions to heterogeneity in returns from public goods," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 43(1), pages 195-217, June.
    11. Andrej Škraba & Miroljub Kljajić & Mirjana Kljajić Borštnar, 2007. "The Role of Information Feedback in the Management Group Decision-Making Process Applying System Dynamics Models," Group Decision and Negotiation, Springer, vol. 16(1), pages 77-95, January.
    12. R. Isaac & James Walker & Susan Thomas, 1984. "Divergent evidence on free riding: An experimental examination of possible explanations," Public Choice, Springer, vol. 43(2), pages 113-149, January.
    13. Malhotra, Deepak, 2010. "The desire to win: The effects of competitive arousal on motivation and behavior," Organizational Behavior and Human Decision Processes, Elsevier, vol. 111(2), pages 139-146, March.
    14. Stutzer, Alois & Frey, Bruno S., 2012. "Recent Developments in the Economics of Happiness: A Selective Overview," IZA Discussion Papers 7078, Institute of Labor Economics (IZA).
    15. Melanie Marks & David Lehr & Ray Brastow, 2006. "Cooperation versus Free Riding in a Threshold Public Goods Classroom Experiment," The Journal of Economic Education, Taylor & Francis Journals, vol. 37(2), pages 156-170, April.
    16. Prpić, John & Shukla, Prashant P. & Kietzmann, Jan H. & McCarthy, Ian P., 2015. "How to work a crowd: Developing crowd capital through crowdsourcing," Business Horizons, Elsevier, vol. 58(1), pages 77-85.
    17. Sara Loughran Dommer & Vanitha Swaminathan, 2013. "Explaining the Endowment Effect through Ownership: The Role of Identity, Gender, and Self-Threat," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 39(5), pages 1034-1050.
    18. Lin, Chien-Huang & Chuang, Shih-Chieh & Kao, Danny T. & Kung, Chaang-Yung, 2006. "The role of emotions in the endowment effect," Journal of Economic Psychology, Elsevier, vol. 27(4), pages 589-597, August.
    19. Alfonso Mateos & Antonio Jiménez-Martín & Sixto Ríos-Insua, 2015. "A Group Decision-Making Methodology with Incomplete Individual Beliefs Applied to e-Democracy," Group Decision and Negotiation, Springer, vol. 24(4), pages 633-653, July.
    20. Marks, Melanie & Croson, Rachel, 1998. "Alternative rebate rules in the provision of a threshold public good: An experimental investigation," Journal of Public Economics, Elsevier, vol. 67(2), pages 195-220, February.
    21. Kuppuswamy, Venkat & Bayus, Barry L., 2017. "Does my contribution to your crowdfunding project matter?," Journal of Business Venturing, Elsevier, vol. 32(1), pages 72-89.
    22. R. Isaac & David Schmidtz & James Walker, 1989. "The assurance problem in a laboratory market," Public Choice, Springer, vol. 62(3), pages 217-236, September.
    23. Zhuoxin Li & Jason A. Duan, 2014. "Dynamic Strategies for Successful Online Crowdfunding," Working Papers 14-09, NET Institute.
    24. Smith, Vernon L, 1980. "Experiments with a Decentralized Mechanism for Public Good Decisions," American Economic Review, American Economic Association, vol. 70(4), pages 584-599, September.
    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. Christof Weinhardt & Simon Kloker & Oliver Hinz & Wil M. P. Aalst, 2020. "Citizen Science in Information Systems Research," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 62(4), pages 273-277, August.

    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. Cox, Caleb A., 2015. "Cursed beliefs with common-value public goods," Journal of Public Economics, Elsevier, vol. 121(C), pages 52-65.
    2. Erik Ansink & Mark Koetse & Jetske Bouma & Dominic Hauck & Daan van Soest, 2017. "Crowdfunding public goods: An experiment," Tinbergen Institute Discussion Papers 17-119/VIII, Tinbergen Institute.
    3. Bougherara, Douadia & Denant-Boemont, Laurent & Masclet, David, 2011. "Cooperation and framing effects in provision point mechanisms: Experimental evidence," Ecological Economics, Elsevier, vol. 70(6), pages 1200-1210, April.
    4. Maoliang Ye & Jie Zheng & Plamen Nikolov & Sam Asher, 2020. "One Step at a Time: Does Gradualism Build Coordination?," Management Science, INFORMS, vol. 66(1), pages 113-129, January.
    5. Charles Cadsby & Rachel Croson & Melanie Marks & Elizabeth Maynes, 2008. "Step return versus net reward in the voluntary provision of a threshold public good: An adversarial collaboration," Public Choice, Springer, vol. 135(3), pages 277-289, June.
    6. 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.
    7. Zack Dorner & Steven Tucker & Gazi Hassan, 2021. "A veil of ignorance: uncertain and ambiguous individual productivity supports stable contributions to a public good," Working Papers in Economics 21/01, University of Waikato.
    8. Saldarriaga-Isaza, Adrián & Villegas-Palacio, Clara & Arango, Santiago, 2015. "Phasing out mercury through collective action in artisanal gold mining: Evidence from a framed field experiment," Ecological Economics, Elsevier, vol. 120(C), pages 406-415.
    9. Sorensen, Andrea Lockhart, 2015. "Asymmetry, uncertainty, and limits in a binary choice experiment with positive spillovers," Journal of Economic Behavior & Organization, Elsevier, vol. 116(C), pages 43-55.
    10. Lippert, Steffen & Tremewan, James, 2021. "Pledge-and-review in the laboratory," Games and Economic Behavior, Elsevier, vol. 130(C), pages 179-195.
    11. Douadia Bougherara & Laurent Denant-Boèmont & David Masclet, 2007. "Creating vs. maintaining threshold public goods in conservation policies," Working Papers hal-01939965, HAL.
    12. Portillo, Javier E., 2019. "Land-assembly and externalities: How do positive post-development externalities affect land aggregation outcomes?," Regional Science and Urban Economics, Elsevier, vol. 77(C), pages 104-124.
    13. Tibor Neugebauer & Stefan Traub, 2012. "Public good and private good valuation for waiting time reduction: a laboratory study," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 39(1), pages 35-57, June.
    14. Yin, Xile & Li, Jianbiao & Bao, Te, 2019. "Does overconfidence promote cooperation? Theory and experimental evidence," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 79(C), pages 119-133.
    15. 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.
    16. Caleb A. Cox & Brock Stoddard, 2021. "Common-Value Public Goods and Informational Social Dilemmas," American Economic Journal: Microeconomics, American Economic Association, vol. 13(2), pages 343-369, May.
    17. Urs Fischbacher & Werner Güth & M. Vittoria Levati, 2011. "Crossing the Point of No Return: A Public Goods Experiment," Jena Economics Research Papers 2011-059, Friedrich-Schiller-University Jena.
    18. Corina Haita-Falah, 2021. "Bygones in a public project," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 57(2), pages 229-256, August.
    19. Gangadharan, Lata & Nikiforakis, Nikos & Villeval, Marie Claire, 2017. "Normative conflict and the limits of self-governance in heterogeneous populations," European Economic Review, Elsevier, vol. 100(C), pages 143-156.
    20. James Andreoni & Laura Gee, 2015. "Gunning for efficiency with third party enforcement in threshold public goods," Experimental Economics, Springer;Economic Science Association, vol. 18(1), pages 154-171, March.

    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:spr:grdene:v:27:y:2018:i:4:d:10.1007_s10726-018-9578-6. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    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.