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Public Goods Provision with Rent-Extracting Administrators

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  • Tobias Cagala
  • Ulrich Glogowsky
  • Veronika Grimm
  • Johannes Rincke

Abstract

This paper studies public goods provision in an experiment in which contributors repeatedly interact with rent-extracting administrators. Our main result is that the presence of an administrator reduces contributions but only because rent extraction lowers the MPCR. Analysing the dynamic interactions between the contributors and the administrator, we demonstrate that rent-extraction and cooperation shocks trigger short-run adjustments in the agents’ behaviour. However, shocks do not have permanent effects. This explains the long-run resilience of cooperation to rent extraction. We also show that cooperative attitudes and trust are traits that explain permanent differences in the short-run volatility of public goods provision.

Suggested Citation

  • Tobias Cagala & Ulrich Glogowsky & Veronika Grimm & Johannes Rincke, 2017. "Public Goods Provision with Rent-Extracting Administrators," CESifo Working Paper Series 6801, CESifo.
  • Handle: RePEc:ces:ceswps:_6801
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    Cited by:

    1. Banerjee, Ritwik & Boly, Amadou & Gillanders, Robert, 2022. "Anti-tax evasion, anti-corruption and public good provision: An experimental analysis of policy spillovers," Journal of Economic Behavior & Organization, Elsevier, vol. 197(C), pages 179-194.
    2. repec:awi:wpaper:0728 is not listed on IDEAS
    3. 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.

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    More about this item

    Keywords

    cooperation; rent extraction; corruption; trustworthiness; public goods; public trust game; panel vector autoregressive model;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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