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Enforcement of Contribution Norms in Public Good Games with Heterogeneous Populations

  • Ernesto Reuben
  • Arno Riedl

Economic and social interaction takes place between individuals with heterogeneous characteristics. We investigate experimentally the emergence and informal enforcement of different contribution norms to a public good in homogeneous and different heterogeneous groups. When punishment is not allowed all groups converge towards free-riding. With punishment, contributions increase and differ distinctly across groups and individuals with different induced characteristics. We show econometrically that these differences are not accidentally but enforced by punishment. The enforced contribution norms are related to fairness ideas of equity regarding the contributions but not regarding the earnings. Individuals with different characteristics tacitly agree on the norm to be enforced, even if this leads to large payoff differences. Our results also emphasize the role of details of the environment that may alter focal contribution norms in an important way.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2725.

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Date of creation: 2009
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Handle: RePEc:ces:ceswps:_2725
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