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Heterogeneous Reactions to Heterogeneity in Returns from Public Goods

  • Urs Fischbacher

    ()

    (Thurgau Institute of Economics at the University of Konstanz, Department of Economics, Germany)

  • Simeon Schudy

    ()

    (Thurgau Institute of Economics at the University of Konstanz, Department of Economics, Germany)

  • Sabrina Teyssier

    ()

    (Thurgau Institute of Economics at the University of Konstanz, Department of Economics, Germany)

In many cases individuals benefit differently from the provision of a public good. We study in a laboratory experiment how heterogeneity in returns and uncertainty affects unconditional and conditional contribution behavior in a linear public goods game. The elicitation of conditional contributions in combination with a within subject design allows us to investigate belief-independent and type-specific reactions to heterogeneity. We find that, on average, heterogeneity in returns decreases unconditional contributions but does not affects conditional contributions only weakly. Uncertainty in addition to heterogeneity reduces conditional contributions slightly. Individual reactions to heterogeneity differ systematically. Selfish subjects and one third of conditional cooperators do not react to heterogeneity whereas the reactions of the remaining conditional cooperators vary. A substantial part of heterogeneity in reactions can be explained by inequity aversion which accounts for different reference groups subjects compare to.

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Paper provided by Department of Economics, University of Konstanz in its series Working Paper Series of the Department of Economics, University of Konstanz with number 2012-14.

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Length: 40 pages
Date of creation: 31 Mar 2012
Date of revision:
Handle: RePEc:knz:dpteco:1214
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