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Voting on Thresholds for Public Goods: Experimental Evidence

Author

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  • Julian Rauchdobler
  • Rupert Sausgruber
  • Jean-Robert Tyran

Abstract

Introducing a threshold in the sense of a minimal project size transforms a public goods game with an inefficient equilibrium into a coordination game with a set of Pareto-superior equilibria. Thresholds may therefore improve efficiency in the voluntary provision of public goods. In our one-shot experiment, we find that coordination often fails and exogenously imposed thresholds are ineffective at best and often counter-productive. This holds under a range of threshold levels and refund rates. We test if thresholds perform better if they are endogenously chosen, i.e. if a threshold is approved in a referendum, because voting may facilitate coordination due to signaling and commitment effects. We find that voting does have signaling and commitment effects but they are not strong enough to significantly improve the efficiency of thresholds.

Suggested Citation

  • Julian Rauchdobler & Rupert Sausgruber & Jean-Robert Tyran, 2009. "Voting on Thresholds for Public Goods: Experimental Evidence," CESifo Working Paper Series 2896, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_2896
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    References listed on IDEAS

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    Cited by:

    1. Thomas de Hoop & Ricardo Fort & Luuk van Kempen, 2009. "Do people invest in local public goods with long-term benefits? Experimental evidence from a shanty town in peru," Artefactual Field Experiments 00070, The Field Experiments Website.
    2. Freytag, Andreas & Güth, Werner & Koppel, Hannes & Wangler, Leo, 2014. "Is regulation by milestones efficiency enhancing? An experimental study of environmental protection," European Journal of Political Economy, Elsevier, vol. 33(C), pages 71-84.
    3. Tausch, Franziska & Potters, Jan & Riedl, Arno, 2013. "Preferences for redistribution and pensions. What can we learn from experiments?," Journal of Pension Economics and Finance, Cambridge University Press, vol. 12(03), pages 298-325, July.
    4. Adriana Bernal Escobar & Rafael Cuervo & Gonzalo Pinzón Trujillo & Jorge H. Maldonado., 2013. "Derretimiento y Retroceso Glaciar: Entendiendo la Percepción de los Hogares Agrícolas que se Enfrentan a los Desafíos del Cambio Climático," DOCUMENTOS CEDE 010679, UNIVERSIDAD DE LOS ANDES-CEDE.
    5. repec:eee:streco:v:44:y:2018:i:c:p:55-67 is not listed on IDEAS
    6. Cartwright, Edward & Stepanova, Anna, 2015. "The consequences of a refund in threshold public good games," Economics Letters, Elsevier, vol. 134(C), pages 29-33.
    7. Bogliacino, Francesco & Grimalda, Gianluca & Jimenez, Laura, 2017. "Consultative Democracy & Trust," MPRA Paper 82138, University Library of Munich, Germany.
    8. Kube, Sebastian & Schaube, Sebastian & Schildberg-Hörisch, Hannah & Khachatryan, Elina, 2015. "Institution formation and cooperation with heterogeneous agents," European Economic Review, Elsevier, vol. 78(C), pages 248-268.
    9. Todd Cherry & David McEvoy, 2013. "Enforcing Compliance with Environmental Agreements in the Absence of Strong Institutions: An Experimental Analysis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 54(1), pages 63-77, January.
    10. Christoph Engel & Bettina Rockenbach, 2014. "Give Everybody a Voice! The Power of Voting in a Public Goods Experiment with Externalities," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2014_16, Max Planck Institute for Research on Collective Goods.
    11. Federica Alberti & Edward J. Cartwright, 2016. "Full agreement and the provision of threshold public goods," Public Choice, Springer, vol. 166(1), pages 205-233, January.
    12. Bernal-Escobar, Adriana & Cuervo-Sánchez, Rafael & Pinzon-Trujillo, Gonzalo & Maldonado, Jorge Higinio, 2013. "Glacier Melting and Retreat: Understanding the Perception of Agricultural Households That Face the Challenges of Climate Change," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149005, Agricultural and Applied Economics Association.
    13. Bernal-Escobar, Adriana & Cuervo, Rafael & Pinzon, Gonzalo & Higinio, Jorge, 2013. "Derretimiento y Retroceso Glaciar: Entendiendo la Percepción de los Hogares Agrícolas que se Enfrentan a los Desafíos del Cambio Climático," Documentos CEDE Series 161358, Universidad de Los Andes, Economics Department.
    14. Daniel A. DeCaro & Marco A. Janssen & Allen Lee, 2015. "Synergistic effects of voting and enforcement on internalized motivation to cooperate in a resource dilemma," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 10(6), pages 511-537, November.
    15. Carlsson, Fredrik & Johansson-Stenman, Olof & Pham Khanh, Nam, 2011. "Funding a New Bridge in Rural Vietnam: A field experiment on conditional cooperation and default contributions," Working Papers in Economics 503, University of Gothenburg, Department of Economics.

    More about this item

    Keywords

    provision of public goods; threshold; voting; experiments;

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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