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Voting on Thresholds for Public Goods: Experimental Evidence

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  • Julian Rauchdobler

    (Department of Public Economics, University of Innsbruck)

  • Rupert Sausgruber

    (Department of Public Economics, University of Innsbruck)

  • Jean-Robert Tyran

    (Department of Economics, University of Copenhagen)

Abstract

Introducing a threshold in the sense of a minimal project size transforms a public goods 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 counter-productive. This holds under a range of threshold levels and refund rates. We test if thresholds perform better if they are endogenously chosen, i.e. if 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

Paper provided by University of Copenhagen. Department of Economics in its series Discussion Papers with number 09-27.

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Length: 21 pages
Date of creation: Dec 2009
Date of revision:
Handle: RePEc:kud:kuiedp:0927

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Keywords: provision of public goods; threshold; voting; experiments;

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Cited by:
  1. 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, UNIVERSIDAD DE LOS ANDES-CEDE 010679, UNIVERSIDAD DE LOS ANDES-CEDE.
  2. Tausch Franziska & Potters Jan & Riedl Arno, 2010. "Preferences for Redistribution and Pensions: What Can We Learn from Experiments?," Research Memorandum 043, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  3. 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, University of Gothenburg, Department of Economics 503, University of Gothenburg, Department of Economics.
  4. Thomas de Hoop & Luuk van Kempen & Ricardo Fort, 2009. "Do people invest in local public goods with long-term benefits? Experimental evidence from a shanty town in peru," Artefactual Field Experiments, The Field Experiments Website 00070, The Field Experiments Website.
  5. 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., Agricultural and Applied Economics Association 149005, Agricultural and Applied Economics Association.
  6. 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, European Association of Environmental and Resource Economists, vol. 54(1), pages 63-77, January.

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