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

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  • Yoav Wachsman

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

Abstract

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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    File URL: http://www.economics.hawaii.edu/research/workingpapers/WP_02-5.pdf
    File Function: First version, 2002
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    Citations

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    Cited by:

    1. Tjaša Bjedov & Simon Lapointe & Thierry Madiès & Marie Villeval, 2018. "Does decentralization of decisions increase the stability of large groups?," Working Papers halshs-01691475, HAL.
    2. 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.
    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. 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," ZEW Discussion Papers 17-012, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

    More about this item

    Keywords

    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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