Behavioral Spillovers in Local Public Goods Provision: an Experimental Study

In a circular neighborhood, each member has a left and a right neighbor with whom (s)he interacts repeatedly. From their two separate endowment amounts individuals can contribute to each of their two structurally independent public goods, either shared only with their left, respectively right, neighbor. If most group members are discrimination averse and conditionally cooperating with their neighbors, this implies intra- as well as interpersonal spillovers which link all neighbors. Investigating individual adaptations in one’s two games with differing free-riding incentives confirms, through behavioral spillovers, that both individual contributions anchor on the local public good with the smaller free-riding incentive. Therefore asymmetry in gaining from local public goods allows to establish a higher level of voluntary cooperation.