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A Dynamic Analysis of the Evolution of Conventions in a Public Goods Experiment with Intergenerational Advice

  • Sara Graziano
  • Ananish Chaudhuri
  • Pushkar Maitra

In this paper we analyse contributions to a public good within an inter-generational framework where at the end of each session one generation of subjects leave advice for the succeeding generation via free form messages. Such advice can be private (advice left by one player in generation t is given only to her immediate successor in generation t+1) or public (advice left by players of generation t is made available to all members of generation t+1). We adopt a novel approach to analysing the data by estimating a panel regression model that enables us to understand the dynamics of the process better and to highlight the learning that occurs over time. Our estimation results show that contributions in any period depend crucially on (1) contributions in the previous period and (2) on the group average in the previous period - more specifically whether a subject’s own contribution in the previous period fell above or below the group average. We find that in the public advice treatment when a subject’s contribution fell below the group average in the previous period there is a tendency on the part of that subject to increase contributions in the next period. This is evidence that the public advice treatment leads to the creation of virtuous norms that help sustain high cooperation and mitigate problems of free riding over time.

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Paper provided by Econometric Society in its series Econometric Society 2004 Australasian Meetings with number 38.

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Date of creation: 11 Aug 2004
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Handle: RePEc:ecm:ausm04:38
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  1. Ernst Fehr & Simon Gaechter, . "Cooperation and Punishment in Public Goods Experiments," IEW - Working Papers 010, Institute for Empirical Research in Economics - University of Zurich.
  2. R. M. Isaac & J. M. Walker, 2010. "Group size effects in public goods provision: The voluntary contribution mechanism," Levine's Working Paper Archive 310, David K. Levine.
  3. Shotter, A. & Sopher, B., 2001. "Advice and Behavior in Intergenerational Ultimatum Games: An Experimental Approach," Working Papers 01-04, C.V. Starr Center for Applied Economics, New York University.
  4. Andrew Schotter, 2003. "Decision Making with Naive Advice," American Economic Review, American Economic Association, vol. 93(2), pages 196-201, May.
  5. Schotter, A. & Sopher, B., 2001. "Social Learning and Coordination Conventions in Inter-Generational Games: An Experimental Study," Working Papers 01-10, C.V. Starr Center for Applied Economics, New York University.
  6. Andreoni, James, 1995. "Cooperation in Public-Goods Experiments: Kindness or Confusion?," American Economic Review, American Economic Association, vol. 85(4), pages 891-904, September.
  7. Marwell, Gerald & Ames, Ruth E., 1981. "Economists free ride, does anyone else? : Experiments on the provision of public goods, IV," Journal of Public Economics, Elsevier, vol. 15(3), pages 295-310, June.
  8. Matthew Rabin., 1997. "Psychology and Economics," Economics Working Papers 97-251, University of California at Berkeley.
  9. Andreoni, James, 1988. "Why free ride? : Strategies and learning in public goods experiments," Journal of Public Economics, Elsevier, vol. 37(3), pages 291-304, December.
  10. R. Isaac & James Walker & Susan Thomas, 1984. "Divergent evidence on free riding: An experimental examination of possible explanations," Public Choice, Springer, vol. 43(2), pages 113-149, January.
  11. Isaac, R. Mark & McCue, Kenneth F. & Plott, Charles R., . "Public Goods Provision in an Experimental Environment," Working Papers 428, California Institute of Technology, Division of the Humanities and Social Sciences.
  12. Keser, Claudia & van Winden, Frans, 2000. " Conditional Cooperation and Voluntary Contributions to Public Goods," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(1), pages 23-39, March.
  13. Andereoni, J., 1988. "Why Free Ride? Strategies And Learning In Public Goods Experiments," Working papers 375, Wisconsin Madison - Social Systems.
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