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The Value of Non-Binding Announcements in Public Goods Experiments: some Theory and Experimental Evidence

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  • Markwardt, Gunther
  • Dittrich, Marcus
  • Berlemann, Michael

Abstract

In this paper we present three simple theoretical models to explain the influence of the possibility to make non-binding announcements on future investment behaviour in public good settings. Our models build on the idea that voluntary contributions to the supply of a public good might be motivated by some form of joy of giving. We show that the possibility to make non-binding announcements has a positive effect on cooperative behaviour, especially if individual announcements and factual investments are communicated to the players after each round. We also show that this result holds true even though the players have an incentive to overstate their true degrees of cooperativeness. Altogether, our theoretical considerations point in the direction that revealing as much information on individual intentions and factual behaviour as possible enhances cooperative behaviour. These conclusions are broadly confirmed by the results of a series of classroom experiments we present. --

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Bibliographic Info

Paper provided by Dresden University of Technology, Faculty of Business and Economics, Department of Economics in its series Dresden Discussion Paper Series in Economics with number 03/04.

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Date of creation: 2004
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Handle: RePEc:zbw:tuddps:0304

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Keywords: Public goods; Announcements; Joy of giving; Experimental economics;

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References

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  1. Matthew Rabin., 1992. "Incorporating Fairness into Game Theory and Economics," Economics Working Papers 92-199, University of California at Berkeley.
  2. Andreoni, James, 1989. "Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1447-58, December.
  3. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
  4. Kenneth S. Chan & Rob Godby & Stuart Mestelman & R. Andrew Muller, 1998. "Crowding Out Voluntary Contributions to Public Goods," Department of Economics Working Papers 1998-03, McMaster University.
  5. McCloskey, Donald N, 1985. "The Loss Function Has Been Mislaid: The Rhetoric of Significance Tests," American Economic Review, American Economic Association, vol. 75(2), pages 201-05, May.
  6. Ernst Fehr & Simon Gaechter, 1999. "Cooperation and Punishment in Public Goods Experiments," CESifo Working Paper Series 183, CESifo Group Munich.
  7. Falk, Armin & Fischbacher, Urs, 2001. "A Theory of Reciprocity," CEPR Discussion Papers 3014, C.E.P.R. Discussion Papers.
  8. Andreoni, James, 1990. "Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving?," Economic Journal, Royal Economic Society, vol. 100(401), pages 464-77, June.
  9. Jeannette Brosig & Joachim Weimann & Axel Ockenfels, 2003. "The Effect of Communication Media on Cooperation," German Economic Review, Verein für Socialpolitik, vol. 4(2), pages 217-241, 05.
  10. Isaac, R Mark & Walker, James M, 1988. "Communication and Free-Riding Behavior: The Voluntary Contribution Mechanism," Economic Inquiry, Western Economic Association International, vol. 26(4), pages 585-608, October.
  11. James Andreoni & Ragan Petrie, 2003. "Public Goods Experiments Without Confidentiality: A Glimpse Into Fund-Raising," Levine's Working Paper Archive 506439000000000520, David K. Levine.
  12. Isaac, R. Mark & McCue, Kenneth F. & Plott, Charles R., . "Public Goods Provision in an Experimental Environment," Working Papers 428, California Institute of Technology, Division of the Humanities and Social Sciences.
  13. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory Of Fairness, Competition, And Cooperation," The Quarterly Journal of Economics, MIT Press, vol. 114(3), pages 817-868, August.
  14. Ledyard, John O., . "Public Goods: A Survey of Experimental Research," Working Papers 861, California Institute of Technology, Division of the Humanities and Social Sciences.
  15. Gary E Bolton & Axel Ockenfels, 1997. "A Theory of Equity, Reciprocity, and Competition," Levine's Working Paper Archive 1889, David K. Levine.
  16. Brosig, Jeannette, 2002. "Identifying cooperative behavior: some experimental results in a prisoner's dilemma game," Journal of Economic Behavior & Organization, Elsevier, vol. 47(3), pages 275-290, March.
  17. Berlemann, Michael, 2003. "The effect of signalling and beliefs on the voluntary provision of public goods," Dresden Discussion Paper Series in Economics 10/03, Dresden University of Technology, Faculty of Business and Economics, Department of Economics.
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Cited by:
  1. Di Bartolomeo Giovanni & Papa Stefano, 2011. "Trust, reciprocity and altruism: An impossible addition," wp.comunite 0082, Department of Communication, University of Teramo.
  2. Christoph Engel & Lilia Zhurakhovska, 2013. "Words Substitute Fists – Justifying Punishment in a Public Good Experiment," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2013_16, Max Planck Institute for Research on Collective Goods, revised Jan 2014.

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