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Relative performance of two simple incentive mechanisms in a public good experiment

Author

Listed:
  • Juergen Bracht

    (Department of Economics, University of Aberdeen Business School)

  • Charles Figuières

    (INRA, UMR LAMETA)

  • Marisa Ratto

    (Leverhulme Centre for Market and Public Organisation, University of Bristol)

Abstract

The paper reports on experiments designed to compare the performance of two incentive mechanisms in public goods problems. One mechanism rewards and penalizes deviations from the average contribution of the other agents to the public good (tax-subsidy mechanism). Another mechanism allows agents to subsidize the other agents’ contributions (compensation mechanism). It is found that both mechanisms lead to an increase in the level of contribution to the public good. The tax-subsidy mechanism allows for good point prediction of the average level of contribution. The compensation mechanism predicts the level of contributions less reliably.

Suggested Citation

  • Juergen Bracht & Charles Figuières & Marisa Ratto, 2004. "Relative performance of two simple incentive mechanisms in a public good experiment," IDEP Working Papers 0409, Institut d'economie publique (IDEP), Marseille, France.
    • Handle: RePEc:iep:wpidep:0409
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    References listed on IDEAS

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    More about this item

    Keywords

    Public Goods; Voluntary Provision; Incentive Mechanisms.;
    All these keywords.

    JEL classification:

    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • D62 - Microeconomics - - Welfare Economics - - - Externalities

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