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Playing with other people's money: Contributions to public goods by trustees

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  • Makowsky, Michael D.
  • Orman, Wafa Hakim
  • Peart, Sandra J.

Abstract

Decisions about public goods in the real world are frequently made by trustees—individuals responsible for managing pools of contributed funds—rather than by the contributors themselves. We conduct a laboratory experiment to compare contributions made by trustees who play with other trustees using their group's resources, with contributions made from their own endowment. We examine the decisions made by subjects in the two voluntary contribution public goods games, distinguishing between altruistic and reciprocal actions, and unpacking the heterogeneity of other-regarding preferences. Subjects contribute more when acting as trustees than when playing with their own money. Consistent with theories of other-regarding preferences, subjects free-ride less when they serve as trustees. They also more frequently conditionally contribute amounts greater than the unconditional contributions of other trustees in the group, while also unconditionally contributing more than they expect from others.

Suggested Citation

  • Makowsky, Michael D. & Orman, Wafa Hakim & Peart, Sandra J., 2014. "Playing with other people's money: Contributions to public goods by trustees," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 53(C), pages 44-55.
    • Handle: RePEc:eee:soceco:v:53:y:2014:i:c:p:44-55
    DOI: 10.1016/j.socec.2014.08.003
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    References listed on IDEAS

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    Cited by:

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    2. Thöni, Christian & Volk, Stefan, 2018. "Conditional cooperation: Review and refinement," Economics Letters, Elsevier, vol. 171(C), pages 37-40.
    3. Bergantino, Angela Stefania & Morone, Andrea & Gil Gallen, Sara, 2020. "Do risk and competition trigger conditional cooperative behavior? Evidence from Public good experiment," MPRA Paper 104465, University Library of Munich, Germany.
    4. Geng, Yini & Liu, Yifan & Lu, Yikang & Shen, Chen & Shi, Lei, 2022. "Reinforcement learning explains various conditional cooperation," Applied Mathematics and Computation, Elsevier, vol. 427(C).
    5. Eraslan, Veysel & Omole, John & Sensoy, Ahmet & Ozdamar, Melisa, 2022. "Other people's money: A comparison of institutional investors," Emerging Markets Review, Elsevier, vol. 53(C).
    6. Luca Corazzini & Christopher Cotton & Tommaso Reggiani, 2020. "Delegation and coordination with multiple threshold public goods: experimental evidence," Experimental Economics, Springer;Economic Science Association, vol. 23(4), pages 1030-1068, December.
    7. Angela Stefania Bergantino & Sara Gil‐Gallen & Andrea Morone, 2023. "Do risk and competition trigger conditional cooperation? Evidence from public good experiments," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 94(1), pages 39-73, March.

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    More about this item

    Keywords

    Laboratory experiment; Free riding; Public goods game; Voluntary contribution mechanism; Trustees; Leadership;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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