Altruism and Noisy Behavior in One-Shot Public Goods Experiments
AbstractAn increase in the common marginal value of a public good has two effects: it increases the benefit of a contribution to others, and it reduces the net cost of making a contribution. These two effects can be decomposed by letting a contribution have an "internal" return for oneself that differs from the "external" return to someone else. We use this framework in a series of one-shot public goods games in which subjects make choices in ten treatments with no feedback. Contributions are generally increasing in the external return and group size, which suggests that altruism in this context is not simply of the "warm glow" variety, i.e. giving only for the sake of giving. Contributions are also increasing in the internal return, indicating that decisions are sensitive to the costs of helping others. We specify a logit equilibrium model in which individuals are motivated by own and others' earnings, and in which choice is stochastic. Maximum likelihood estimates of altruism and logit error parameters are significant and of reasonable magnitudes, and the resulting two-parameter model tracks the pattern of contributions across the ten treatments remarkably well.
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Bibliographic InfoPaper provided by University of Virginia, Department of Economics in its series Virginia Economics Online Papers with number 331.
Length: 25 pages
Date of creation: Sep 1999
Date of revision:
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Web page: http://www.virginia.edu/economics/home.html
public goods; voluntary contributions; marginal per capita return; internal return; external return; bounded rationality; logit equilibrium; altruism; nonlinear altruism; warm glow altruism; one shot game;
Find related papers by JEL classification:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
This paper has been announced in the following NEP Reports:
- NEP-ALL-2000-02-21 (All new papers)
- NEP-CDM-2000-02-21 (Collective Decision-Making)
- NEP-EXP-2000-02-21 (Experimental Economics)
- NEP-IND-2000-02-21 (Industrial Organization)
- NEP-PUB-2000-02-21 (Public Finance)
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