Irreversibility and Monitoring in Dynamic Games: Experimental Evidence

This paper provides experimental evidence on the impacts of irreversibility and imperfect monitoring on the efficiency and the equity of repeated public goods game. We find that irreversibility and imperfect monitoring both lead to inefficient and unequal outcomes through different channels. Irreversibility lowers public goods contribution in earlier periods and makes the initial-period contribution gap between two players long-lasting. Imperfect monitoring hampers conditional cooperation and reduces group contribution persistently. A finite mixture estimation with conditional cooperator provides a coherent account of the treatment effects.