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The Provision of Public Goods with Positive Group Interdependencies

Author

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  • Werner Güth

    (Max Planck Insitute of Economics, Jena)

  • Lauri Sääksvuori

    (Max Planck Insitute of Economics, Jena)

Abstract

This article examines the nature of human behavior in a nested social dilemma referred to as the Spillover Game. Players are divided into two groups with positive production interdependencies. Based on theoretically derived opportunistic, local, and global optima, our experimental results demonstrate the importance of in-group beneficiaries over global efficiency. We find that the observed behavior is primarily determined by an imperfect conditional cooperation that prioritizes local level feedback. Results stress the importance of building strong local level commitment to encourage the provision of public goods with positive externalities.

Suggested Citation

  • Werner Güth & Lauri Sääksvuori, 2010. "The Provision of Public Goods with Positive Group Interdependencies," Jena Economics Research Papers 2010-022, Friedrich-Schiller-University Jena.
    • Handle: RePEc:jrp:jrpwrp:2010-022
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    References listed on IDEAS

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    More about this item

    Keywords

    Public good; experiment; groups; Spillover Game; social dilemma;
    All these keywords.

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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