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The Effects of Group Interaction in a Public Goods Experiment With Two Exchanges


  • Yoav Wachsman

    () (Department of Economics, University of Hawaii at Manoa)


Consumers can often allocate resources to the provision of local public goods and to the provision of global public goods. This paper reports a public goods experiment in which participants allocated tokens to a local exchange with a relatively high marginal payoff and a global exchange with a lower marginal payoff but a higher potential payoff. The experiment consisted of three treatments with varying degree of interaction amongst the members of the local groups. When participants were not allowed to interact they allocated more tokens to the global exchange. This result suggests that individuals care about the potential payoff of the group exchange more than about the marginal payoff of the exchange. When we allowed members of each local group to communicate, they kept almost no tokens for themselves and attempted to coordinate their contributions to the global exchange with members of the other local group.

Suggested Citation

  • Yoav Wachsman, 2002. "The Effects of Group Interaction in a Public Goods Experiment With Two Exchanges," Working Papers 200205, University of Hawaii at Manoa, Department of Economics.
  • Handle: RePEc:hai:wpaper:200205

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    References listed on IDEAS

    1. La Croix, Sumner J. & Fishback, Price V., 1989. "Firm-specific evidence on racial wage differentials and workforce segregation in Hawaii's sugar industry," Explorations in Economic History, Elsevier, vol. 26(4), pages 403-423, October.
    2. La Croix, Sumner J. & Roumasset, James, 1984. "An economic theory of political change in premissionary Hawaii," Explorations in Economic History, Elsevier, vol. 21(2), pages 151-168, April.
    3. La Croix, Sumner J. & Grandy, Christopher, 1997. "The Political Instability of Reciprocal Trade and the Overthrow of the Hawaiian Kingdom," The Journal of Economic History, Cambridge University Press, vol. 57(01), pages 161-189, March.
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    Cited by:

    1. Kohei Nitta, 2014. "The Effect of Income Heterogeneity in An Experiment with Global and Local Public Goods," Working Papers 201403, University of Hawaii at Manoa, Department of Economics.
    2. Gallier, Carlo & Goeschl, Timo & Kesternich, Martin & Lohse, Johannes & Reif, Christiane & Römer, Daniel, 2017. "Leveling up? An inter-neighborhood experiment on parochialism and the efficiency of multi-level public goods provision," Working Papers 0630, University of Heidelberg, Department of Economics.
    3. Fellner, Gerlinde & Lünser, Gabriele K., 2014. "Cooperation in local and global groups," Journal of Economic Behavior & Organization, Elsevier, vol. 108(C), pages 364-373.
    4. Fellner, Gerlinde & Lünser, Gabriele K., 2008. "Cooperation in local and global groups," Department of Economics Working Paper Series 256, WU Vienna University of Economics and Business.
    5. Tjaša Bjedov & Simon Lapointe & Thierry Madiès & Marie Claire Villeval, 2018. "Does decentralization of decisions increase the stability of large groups?," Working Papers 1802, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.

    More about this item


    Voluntary Contributions Mechanism; Public Goods Experiment; Group Identity; Communication; Coordination;

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods


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