Heterogeneity, Coordination and the Provision of Best-Shot Public Goods

In a best-shot public good, where the provision level is determined by the highest contribution instead of the sum of all contributions, there is potential for waste and underprovision due to coordination failure. These failures are exacerbated when agents are identical because there is no focal point to guide coordination. In most real-world best-shot public-good situations, however, heterogeneity exists in the ability to contribute and the benefits received from the good. With such differences, shared expectations might emerge to improve coordination and increase efficiency. Using laboratory experiments, we find significant behavioral responses to heterogeneity that improve efficiency, but not always from increased coordination. Copyright Economic Science Association 2013