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Crossing the Point of No Return: A Public Goods Experiment

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  • Urs Fischbacher

    (Department of Economics, University of Konstanz, Konstanz, Germany; Thurgau Institute of Economics, Kreuzlingen, Switzerland)

  • Werner Güth

    ()
    (Max Planck Institute of Economics, Strategic Interaction Group)

  • M. Vittoria Levati

    ()
    (Max Planck Institute of Economics, Strategic Interaction Group; Department of Economics, University of Verona)

Abstract

Participants in a public goods experiment receive private or common signals regarding the so-called "point of no return", meaning that if the group's total contribution falls below this point, all payoffs are reduced. An individual faces the usual conflict between private and collective interests above the point of no return, while he incurs the risk of damaging everyone by not surpassing the point. Our data reveal that contributions are higher if the cost of not reaching the threshold is high. In particular if the signal is private, many subjects are not willing to provide the necessary contribution.

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Bibliographic Info

Paper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2011-059.

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Date of creation: 16 Dec 2011
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Handle: RePEc:jrp:jrpwrp:2011-059

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Keywords: Public goods; provision point mechanism; experiments; reduction factor; signal;

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