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Is there a hidden cost of imposing a minimum contribution level for public good contributions?

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  • Kocher, Martin G.
  • Martinsson, Peter
  • Persson, Emil
  • Wang, Xianghong

Abstract

We examine the effects of either exogenously imposing or endogenously letting subjects choose whether to impose minimum contribution levels (MCLs) in a linear public goods experiment using the strategy method. Our results on contribution levels to the public goods are fairly independent of how MCLs are imposed. We find that the main effect of an MCL on unconditional contributions is that it increases low contribution levels to the MCL imposed, while the effect of those contributing more than the MCL before its introduction depends on the size of the MCL. Unexpectedly, there is much more crowding out for a low MCL than for a relatively high MCL. However, the distribution of contribution types is stable across different MCLs.

Suggested Citation

  • Kocher, Martin G. & Martinsson, Peter & Persson, Emil & Wang, Xianghong, 2016. "Is there a hidden cost of imposing a minimum contribution level for public good contributions?," Journal of Economic Psychology, Elsevier, vol. 56(C), pages 74-84.
  • Handle: RePEc:eee:joepsy:v:56:y:2016:i:c:p:74-84
    DOI: 10.1016/j.joep.2016.05.007
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    References listed on IDEAS

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    Cited by:

    1. Martinsson, Peter & Medhin, Haileselassie & Persson, Emil, 2016. "Framing and Minimum Levels in Public Good Provision," Working Papers in Economics 656, University of Gothenburg, Department of Economics.
    2. 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.

    More about this item

    Keywords

    Cooperation; China; Experiment; Minimum level; Public good;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers

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