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The impact of burden sharing rules on the voluntary provision of public goods

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  • Kesternich, Martin
  • Lange, Andreas
  • Sturm, Bodo

Abstract

We investigate how burden sharing rules impact the voluntary provision of a public good which generates heterogeneous benefits to agents. We compare different rule-based contribution schemes where agents can first suggest a minimum provision level of the public good, before the smallest common denominator is implemented. We find that rule-based contribution schemes significantly increase payoff levels relative to the VCM, while significant differences exist between the rules. Importantly, the equal-payoff rule maximizes payoffs for all player types. This also holds relative to a scheme where different types of players separately can determine their minimum contribution levels. Our results lend insights into the efficient institutional design for voluntary private provision of public goods, and how burden sharing rules interact with efficiency when agents are heterogeneous.

Suggested Citation

  • Kesternich, Martin & Lange, Andreas & Sturm, Bodo, 2014. "The impact of burden sharing rules on the voluntary provision of public goods," Journal of Economic Behavior & Organization, Elsevier, vol. 105(C), pages 107-123.
  • Handle: RePEc:eee:jeborg:v:105:y:2014:i:c:p:107-123
    DOI: 10.1016/j.jebo.2014.04.024
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    Cited by:

    1. Andreas Löschel & Dirk Rübbelke, 2014. "On the Voluntary Provision of International Public Goods," Economica, London School of Economics and Political Science, vol. 81(322), pages 195-204, April.
    2. repec:kap:expeco:v:21:y:2018:i:1:d:10.1007_s10683-017-9535-2 is not listed on IDEAS
    3. Martinsson, Peter & Persson, Emil, 2016. "Public Goods and Minimum Provision Levels: Does the institutional formation affect cooperation?," Working Papers in Economics 655, University of Gothenburg, Department of Economics.
    4. Luigi Butera & John A. List, 2017. "An Economic Approach to Alleviate the Crises of Confidence in Science: With an Application to the Public Goods Game," NBER Working Papers 23335, National Bureau of Economic Research, Inc.
    5. Waichman, Israel & Requate, Till & Karde, Markus & Milinski, Manfred, 2018. "Challenging conventional wisdom: Experimental evidence on heterogeneity and coordination in avoiding a collective catastrophic event," Economics Working Papers 2018-05, Christian-Albrechts-University of Kiel, Department of Economics.
    6. Kube, Sebastian & Schaube, Sebastian & Schildberg-Hörisch, Hannah & Khachatryan, Elina, 2015. "Institution formation and cooperation with heterogeneous agents," European Economic Review, Elsevier, vol. 78(C), pages 248-268.
    7. Lise Vesterlund, 2015. "The Effect of Incentives on Real Effort: Evidence from the Slider Task," Working Paper 5661, Department of Economics, University of Pittsburgh.
    8. Elsner, Wolfram, 2015. "Policy Implications of Economic Complexity and Complexity Economics," MPRA Paper 63252, University Library of Munich, Germany.
    9. Gallier, Carlo & Langbein, Jörg & Vance, Colin, 2016. "That's my turf: An experimental analysis of territorial use rights for fisheries in Indonesia," Ruhr Economic Papers 651, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    10. Xiaochuan Huang & Takehito Masuda & Yoshitaka Okano & Tatsuyoshi Saijo, 2014. "Cooperation among behaviorally heterogeneous players in social dilemma with stay or leave decisions," Working Papers SDES-2014-7, Kochi University of Technology, School of Economics and Management, revised Feb 2015.
    11. Gallier, Carlo & Kesternich, Martin & Sturm, Bodo, 2014. "On the Choice and the Effects of Rule-Based Contribution Schemes in Public Good Games," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100421, Verein für Socialpolitik / German Economic Association.
    12. Elsner, Wolfram, 2017. "Policy and State in Complexity Economics," EconStor Preprints 158766, ZBW - German National Library of Economics.
    13. repec:eee:ecolec:v:150:y:2018:i:c:p:62-71 is not listed on IDEAS
    14. Andor, Mark Andreas & Frondel, Manuel & Sommer, Stephan, 2018. "Equity and the willingness to pay for green electricity in Germany," Ruhr Economic Papers 759, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    15. Kesternich, Martin & Lange, Andreas & Sturm, Bodo, 2014. "On the performance of rule-based contribution schemes under endowment heterogeneity," ZEW Discussion Papers 14-055, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    16. Löschel, Andreas & Sturm, Bodo & Uehleke, Reinhard, 2017. "Revealed preferences for voluntary climate change mitigation when the purely individual perspective is relaxed – evidence from a framed field experiment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 67(C), pages 149-160.

    More about this item

    Keywords

    Public goods; Institutions; Minimum contribution rules; Cooperation; Heterogeneity;

    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
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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