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Cooperation and Strategic Complementarity: An Experiment with Two Voluntary Contribution Mechanism Games with Interior Equilibria

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  • Olli Lappalainen

    (Department of Economics, Turku School of Economics at University of Turku, FI-20014 Turku, Finland
    Faculty of Management, University of Tampere, FI-33014 Tampere, Finland)

Abstract

In public goods game experiments, designs implementing non-linearities in the production are less common than the standard linear setting, especially so under the assumption that the private goods production and public goods aggregation function are both non-linear. We study a voluntary contribution game (VCM) in which returns from the private project have diminishing marginal benefits and the contributions to the joint project exhibit pairwise strategic complementarities. As a control, we use a public goods game with an identical private production technology, but with the standard linear public goods aggregation. In addition to the aggregation technology, we manipulate the group size variable: In both treatments, the subjects will first play a VCM game in groups of five for 20 rounds, after which the group size is reduced to two, and the game is played for another 20 rounds. A significant over-contribution is observed in both settings when the group size is five. The rate of over-contribution is much higher under the complementary technology, but as predicted by theory, the contributions drop drastically when the group size is reduced from n = 5 to n = 2 within this treatment. Our experiment also provides empirical evidence that the so-called group size effect is present in both treatments, but it is much weaker under the standard aggregation technology.

Suggested Citation

  • Olli Lappalainen, 2018. "Cooperation and Strategic Complementarity: An Experiment with Two Voluntary Contribution Mechanism Games with Interior Equilibria," Games, MDPI, vol. 9(3), pages 1-24, July.
  • Handle: RePEc:gam:jgames:v:9:y:2018:i:3:p:45-:d:156766
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